23.01.202009:39 Forex Analysis & Reviews: Unexpected forecast for the Canadian economy brought down local currency (growth of USD/CAD pair is still possible, we buy or sell EUR/USD pair in view of C. Lagarde's speech)

The Canadian dollar came under strong pressure following a meeting of the Central Bank of Canada, despite maintaining the key interest rate at the same level of 1.75%. The reason for this was the "dovish" comment from the bank.

At first, the "Canadian" received support before the decision of the regulator on monetary policy because all market expectations came down to the fact that a decision would be made to maintain interest rates and that his statement about the prospects for the national economy would be optimistic. On this wave, the USD/CAD pair declined to the level of 1.3040, but after a press conference announced that weaker economic growth or a progressive slowdown in inflation could give reasons for lowering interest rates, the situation changed sharply. The USD/CAD pair began to grow, adding more than one figure at a time.

Moreover, additional pressure on the Canadian currency on Wednesday also had a fall in crude oil prices, triggered by the International Energy Agency (IEA) forecast for an excess of the crude oil market, which turned out to be stronger than concerns about interruptions in the production of "black gold" in Libya. Against this general negative background for the "Canadian", it continues to decline before the opening of trading in Europe.

Today, attention of the investors will be focused on the final decision of the ECB on monetary policy. The monetary policy of the regulator is expected to remain unchanged. But the attention of the market will be drawn specifically to the speech of its head C. Lagarde. They expect from her coverage of plans for the future. Earlier last fall, a marked weakening of the single European currency stopped, due to a signal from Lagarde that monetary policy could be adjusted. This led to an appreciation of the euro, although, to be sure, it did not become so noticeable, since the bank has not made its plan publicly available during that time, but only flickering statements contradictory to each other. Thus, some that soft policy should continue, while others contradicted this.

It is difficult to say what Lagarde will say today, as she previously made it clear that she would try, as they say, to join forces and direct them towards a more constructive solution to the region's economic problems. If we will set out a "roadmap" today for resolving this problem and it will show a promising change in the monetary rate, although not by much, but in the direction of tightening it, this will undoubtedly support the single currency rate, but if everything remains in a state of discussion of regional problems, the euro is likely to be under pressure.

Forecast of the day:

The EUR/USD pair is consolidating in anticipation of the ECB's final monetary policy decision. We believe that the pair needs to be sold with a possible decline in price to 1.0975 on C. Lagarde's negative speech for the euro or, conversely, to buy on the sound of the regulator's exchange rate with a probable target of 1.1250.

The USD/CAD pair is trading below the level of 1.3165. It can continue to grow to 1.3235 if it breaks through this level, but does not fall below the level of 1.3140.