The June 2023 BOC statement is comin’ right up!
With the BOC likely to announce a “hawkish hold” and the RBNZ approaching the end of its hiking cycle, is NZD/CAD in for a breakdown soon?
As you can see from the hourly chart below, the pair has formed lower highs and found support around .8130, creating a descending triangle.
NZD/CAD 1-hour Forex Chart by TV
Even though the BOC is widely expected to sit on its hands for this month’s policy meeting, many believe that officials could reiterate that they’re open to more tightening if inflation remains strong.
If that’s the case (or if they do hike this time), the Canadian dollar could get a fresh boost against its forex rivals, possibly triggering a bearish break on NZD/CAD.
After all, the RBNZ has hinted that they might pause from tightening in the next meetings since they kept their OCR forecast unchanged last May.
A triangle breakdown could take NZD/CAD down to S1 (.8090) or even S2 (.8050) that lines up with a minor psychological mark.
Now this pair moves an average of roughly 70 pips per day, so these bearish targets are within reach.
Technical indicators are also suggesting that the odds are in favor of more losses for NZD/CAD. The 100 SMA is below the 200 SMA and in line with the triangle top to add to its strength as a ceiling.
Meanwhile, Stochastic has some room to head lower before reflecting oversold conditions, so sellers could stay in control for now.
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