USD/CAD drops to lowest in six days near 1.3500 after BoC press conference

• Loonie gains ground during BoC press conference and as Wall Street trims gains.
• USD/CAD extends slide, eyes 1.3500 and last week lows.

The USD/CAD pair broke under 1.3560 and accelerated the decline. It printed a fresh six-day low at 1.3517. It is holding near the lows, under pressure on the back of a stronger loonie across the board.

The Canadian dollar gained momentum following the Bank of Canada meeting and Macklem’s press conference. The central bank kept the monetary policy stance unchanged as expected. BoC governor mentioned the Governing Council discussed yield curve control.

Before the meeting, USD/CAD was already lower on the back of weaker greenback amid risk appetite. The loonie was falling versus other commodity currencies. After the BoC press conference, the loonie turned positive across the board, becoming one of the top performers.

“Perky risk sentiment and a soggy USD has benefited the loonie. While we anticipate a near-term USDCAD retest of the 1.35 level, it's likely to offer a floor rather than an extension lower. We expect the 1.35 floor to give way later this year, paving the way for a shift back to the low-1.30s”, mentioned analysts at TD Securities.

Technical levels