USD/CAD Price Analysis: The pair dips back below 1.32 as the US dollar takes a breather

• USD/CAD has dropped 0.59% as the dollar rally fades. 
• Oil has also pushed slightly higher after its recent fall.

USD/CAD 4-hour chart

The Canadian dollar has recovered somewhat on Wednesday as USD/CAD dropped 0.59%. This is interesting as the dollar index has fallen 0.30% vs the USD/CAD fall of 0.59% nearly double. It was the Bank of Canada central bank meeting and the BoC kept rates unchanged at 0.25%. There was some reference to the better than expected data. The BoC said “the recuperation phase to be slow and choppy as the economy copes with ongoing uncertainty and structural challenges.” Going forward, the recuperation phase will be “heavily reliant on policy support”.

Looking at the chart, it seems the price has reacted to the fact there was no policy changes and the bank noted the better than expected recent data. The price bounced off the 1.3240 resistance zone and is now resting above another support at 1.3150. There is also a trendline that could support the price if it is to fall further at the purple line. 

The Indicators are still bullish but have turned back a bit. The MACD histogram is green and the signal lines are above the mid-level. The Relative Strength Index is near the 50 mark but the indicator has moved away from the overbought level.

This could be another higher low pattern if the dollar rally is to continue but there could be a period of sideways movement before a definitive move is made. Oil could also continue to drop and that could put a dent in the recent CAD recovery.

Additional levels