Bank of Canada hikes 25bps. More to come!
The Bank of Canada raised rates for the first time since October 2018 by 25bps to 0.50%. This is in-line with most economists’ expectations; however, many market participants were hoping for a 50bps increase. (See our Bank of Canada preview here). The BOC noted that it would continue the reinvestment phase of its balance sheet by keeping bond holdings constant. In addition, the central bank said that it expects to increase interest rates further due to higher inflation from both energy and food-related commodities. The Bank will use monetary policy tools to return inflation to the 2% target and keep inflation expectations well-anchored.
On a daily timeframe, USD/CAD broke below the neckline of a head and shoulders pattern on January 11th and appeared on its way to target near 1.2250. However, the move was halted at the 50% retracement level from the lows of June 2nd, 2021 to the highs of December 2nd, 2021, near 1.2450. Price then bounced and, for the most part, has been trading in a range between 1.2636 and 1.2777 since then.
Source: Tradingview, Stone X
On a 240-minute timeframe, USD/CAD tried to break above the top of the month-long channel and failed. Often, when price fails to move above one side of a channel, it moves to test the other side of the channel. Support is at the bottom horizontal channel line near 1.2636. If price breaks below, it can move to the horizontal support and the 127.2% Fibonacci extension from the low of February 10th to the high of February 24th near 1.2570. The third level of support is at the 161.8% Fibonacci retracement level from the same timeframe and the 50% retracement level from the June 1st, 2021 low to the December 20th, 2021 high, near 1.2485.
Source: Tradingview, Stone X
Resistance is at today’s highs and the downward sloping trendline from February 24th near 1.2745. The next resistance level is the top horizontal trendline near 1.2777 and then the February 24th highs at 1.2878.
The Bank of Canada hiked rates by 25bps, as expected, and said that there is more to come! As a result, USD/CAD has moved lower and is nearing the bottom of the long-term channel the pair has been in for the last month. Watch the additional support below!
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.
FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.
StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255
FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.
The statistical data and the awards received refer to the Global FOREX.com brand.
This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.
Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.
StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.
Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets
We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
© FOREX.COM 2025