The BOC decision is out at 10 AM and the USDCAD traders have positioned the price near technical levels so that they can best define and limit the risk after the details are known.
Adam has outlined the fundamental expectations from the BOC decision (see: https://www.forexlive.com/blog/2014/09/03/preview-three-things-to-watch-in-the-bank-of-canada-statement/).
From a technical perspective the USDCAD charts are a bit messy, but the pair does have some well defined risk levels that will be eyed.
When a key event is to happen, risk is increased as trader interpret what is said and the implications. Adam outlines a potential CAD bullish bias. What will we need to see technically for that scenario to play out?
USDCAD levels to watch through the BOC decison
Looking at the hourly chart above, a bullish tone from the BOC should see the USDCAD move below the 200 hour MA (green line in the chart above) at 1.0906, then the 100 hour MA (blue line in the chart above) at 1.0881. Between those two moving averages is positioned the 200 day MA which is currently around the 1.08917 level (this is the horizontal green line in the chart above).
Traders will likely use these level after “the fact” to define and limit risk. Move through one, look for the next and then the next. What is broken becomes resistance.
If the trend lower continues the 100 day MA is also in play down at the 1.08582 level today. Keep that level in mind as another downside target to get below if the bears in the pair are to really take control.
If the tone is not more positive,, but dovish, traders will then use the 200 hour MA as a launch point, and look for the extension above the high for the day at the 1.0941 to provide the next clue that the trend will be higher. Above that the highs from last week will be targeted.