USD/CAD has been quite volatile with the recent price action due to the recent rate hike in Canada. Higher volatility failed to create definite momentum for the pair. Despite an increase in the interest rates last week, CAD failed to assert its strength over USD. As a result, the pair is expected to trade with higher volatility and indecision in the coming days.

Recently the Bank of Canada took a decision to raise the Overnight Rate to 1.75% as expected from the previous value of 1.50% along with BOC Rate Statement and a policy update. This decision is likely to speed up a pace of future rate hikes without any need of stimulus. To achieve the inflation target, the Governing Council is currently quite optimistic about the economic conditions in Canada but immediate CAD gains may be a bit muted as the rate hike cycle is expected to be extended till 2019. That is why the market sentiment may show a slower response to the currency gains.

On the USD side, amid mixed economic reports the greenback is struggling to sustain its gains over CAD. Besides, the recent rate hike in Canada was a complete blow for USD. In the context of the trade war between the US and China, the trade and commerce section are currently being re-assessed which had an impact on economic indicators recently. Today US Core Durable Goods Orders report was published with a slight increase to 0.1% from the previous value of 0.0% but failed to meet the expected value of 0.5%, Durable Goods Orders decreased to 0.8% from the previous value of 4.4% which was expected to decrease to -1.3%, and Goods Trade Balance report was published with a decrease to -76.0B from the previous figure of -75.5B which was expected to be at -74.9B. Moreover, Unemployment Claims increased to 215k from the previous figure of 210k which was expected to be at 214k.

Meanwhile, USD has been quite indecisive and mixed amid the economic reports published today, whereas CAD is quite solid fundamentally. Though certain indecision about USD still exists, a delayed response of CAD to the recent fundamentals will lead to certain USD gains which may persist for a few days.

Now let us look at the technical view. The price has been recently rejected off the dynamic level of 20 EMA as well as from the support area between 1.2950-1.3050. The price is currently residing above 1.3050 after a strong bearish rejection which is expected to lead to certain bullish pressure with a target towards the resistance area of 1.3300 in the coming days. As the price remains above 1.2950 with a daily close, the bullish bias is expected to continue.

SUPPORT: 1.2950, 1.3050

RESISTANCE: 1.3300, 1.3350

BIAS: BULLISH

MOMENTUM: VOLATILE