USDCAD is trading up 0.03% at 1.2572

The Canadian dollar will gain ground over the coming year as high commodity prices bolster Canada’s economic outlook and the Bank of Canada likely continues to raise interest rates aggressively, a Reuters poll showed.

The loonie is the only G10 currency to keep pace with the U.S. dollar, a magnet for safe-haven flows, in 2022.

The median forecast in the poll was for Canada’s currency to strengthen 0.4% to 1.26 per U.S. dollar, or 79.37 U.S. cents, in three months’ time, compared to 1.2568 in last month’s forecast. It was then expected to climb to 1.23 in a year’s time.

“I think there (are) pretty solid reasons to be constructive on the CAD in the medium term,” said Shaun Osborne, chief currency strategist at Scotiabank.

“The Bank (of Canada) is taking a very proactive approach to policy making… Monetary policy is potentially going to move a little bit more quickly and maybe a bit more aggressively than the Fed (U.S. Federal Reserve) in the next six months.”

The BoC opened the door to a more aggressive pace of tightening on Wednesday, saying it was prepared to act “more forcefully” if needed to tame inflation, even as it went ahead with a historic second consecutive half-percentage-point rate increase, lifting its benchmark rate to 1.50%.

On technical fronts USDCAD RSI stood at 13.94 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : USDCAD – SELL: 1.2570, TARGET: 1.2553, STOP LOSS : 1.2587