USDCAD has been generating a structure of lower highs and lower lows after peaking at the 2023 high of 1.3860 in mid-March. In today’s session, the price pierced through the base of the triangle following the unanticipated rate hike by the BoC.

The momentum indicators currently suggest that near-term risks remain tilted to the downside. Specifically, the RSI descends steeply below the 50-neutral mark, while the MACD is softening below both zero and its red signal line.

Should the decline resume, initial support could be met at the April low of 1.3314. Breaching that zone, the pair could retreat towards the 2023 bottom of 1.3262. Even lower, the November 2022 support of 1.3225 may prove to be a tough one for the bears to overcome.

On the flipside, if the price reverses back higher, the bulls might aim for the recent resistance of 1.3460.  A break above that zone could trigger an advance towards the 1.3550 resistance. Further upside attempts could then encounter resistance at the April peak of 1.3666.

In brief, USDCAD attempted to break its descending triangle to the downside for the first time, with the surprise rate hike by the BoC being the main driver behind this move. Should the price manage to close below this barrier, the recent downtrend is likely to accelerate.