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USD/CAD after a slide lower

USD/CAD retraced 61.8% of the advance from June 14 to July 4 as it touched 1.0325 yesterday after breaking through support at 1.0420 which is now acting as resistance.

The Bank of Canada is expected to leave interest rates unchanged at 1% at its meeting on July 17. Governor Stephen Poloz will also deliver his first monetary policy report since taking up the role June 3.

Bank of Montreal: “No one knows what to make of the Fed taper theme, which is the primary issue driving markets and we’re not going to get any impetus from the Bank of Canada next week. We’ll settle into a range. However, I’m still dollar bullish if you look past July.”

Resistance is at 1.0390, 1.0420/30, 1.0460/70 and 1.0500. Support is at 1.0325, 1.0300 and 1.0250 (76.4% Fibo). There’s still scope for a deeper correction to the mentioned levels. We think that the 1.0300 handle is the most important level for now – above it the bulls retain a chance for rebound, while a slide below would provoke further losses.

Chart. Daily USD/CAD

CAD
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