EUR/CAD drops to fresh 6-week lows on surprise BoC rate hike

The loonie received fresh bids in the NA session after the Bank of Canada announced that it raised its target for the overnight rate to 1%. The EUR/CAD quickly lost more than 200 pips to plummet to its lowest level since late July at 1.4536. As of writing, the pair was trading at 1.4560, losing 1.27% on the day.

Although there was no press conference, the Bank of Canada released its Monetary Policy Report. In the report, the bank highlighted that the recent economic data have been stronger than expected and the Canadian economic growth was becoming more broad-based and self-sustaining. Moreover, the statement revealed that given the stronger-than-expected economic performance, Governing Council judged that today’s removal of some of the considerable monetary policy stimulus in place was warranted.

On Thursday, the ECB is also going to announce its monetary policy decisions, which will be followed by a press conference by the ECB President Mario Draghi. 

• ECB: Room to postpone tapering is limited - ING

Technical outlook

The pair could encounter the first technical support at 1.4535 (daily low) ahead of 1.4500 (psychological level) and 1.4470 (Jul. 20 low). On the upside, resistances could be seen at 1.4600 (psychological level), 1.4680 (Jul. 27 high) and 1.4750 (daily opening level).