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USD/CAD at the Crossroads as BoC Gives a Balanced Statement

The Bank of Canada released its monetary policy statement today after voting to hold its overnight rate at 1.00%. The Bank rate is 1.25%, and the deposit rate is 0.75% - no changes.

The statement is balanced, with a slight positive tone regarding the economy. Basically, the bank sees recent data in inflation and GDP as in-line with previous projections. 

On a slightly positive note

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 Meanwhile, activity in the housing market has been stronger than anticipated. The Bank still expects excess capacity in the economy to be absorbed during the next two years.
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Today's statement didn't provide much guidance, but the next statement in October will be accompanied by the bank's projections on the economy, inflation, housing, etc. This will provide a better clue for interest rate expectations. 

The USD/CAD is at the cross road after a sideways market in August that turned into a possible price top. However, price has returned above 1.09 and threatens to invalidate the price top, and thus revive the bullish outlook. 

USD/CAD 4H Chart 9/3

(click to enlarge)

However, we are seeing some loonie-strength, and USD/CAD has come down below 1.09 again. In the 4H chart, you can see price trading between the moving averages. The RSI has swung from 30 to 70 and back and forth, reflecting non-direction. 

Now if price can climb back above 1.09 during the 9/3 US session, the upside will remain toward the 1.10 handle. IF the USD/CAD is still bullish, the next target will be the 1.1050 resistance pivot from April.

However if price stays south of 1.09, and falls below 1.0880, there might be at leaset a short-term bearish attempt toward the 1.0800 handle.