The pair is still stuck in range as NAFTA talks cast a shadow on the loonie

The hike in rates yesterday by the Bank of Canada saw gyrations similar to the good ol' NFP days (not as wild but we haven't had something like that in a while), but in the aftermath of it all USD/CAD ended the day unchanged.

After the rate hike we saw a bout of dollar weakness across the board and the pair traded to lows of 1.2372 but thereafter the dollar retraced gains to end the day mixed against the major bloc - with USD/CAD virtually back to its starting point in the day.

The hike by the Bank of Canada was a relatively "cautious" one and I felt that they played it out well by heavily emphasising on the risks posed by a breakdown in NAFTA talks. For now, that's helping to keep the CAD on a lid - but at the same time, as long as talks continue to stall (politicians being who they are), it looks like USD/CAD is in no hurry to go anywhere.

The lows yesterday saw the pair test the 61.8 retracement level on the daily chart again, a level that held during the recent downtrend move at the start of the year. So far, that's the level sellers need to break through for another move to the downside.

Meanwhile, to the topside there's resistance sitting at the 50.0 retracement level at 1.2490 and further up there's a combo of the 38.2 retracement level and the 100-day MA near the 1.2590 level.

Near-term resistance sees the pair struggle to break through the 100 and 200-hour MA in yesterday's skirmish. Buyers don't seem to have enough of a conviction for a break higher, especially when the dollar remains so fragile in trading this year. And the same may go for trading today as well.

As long as things remain this way, expect USD/CAD to still range somewhere between the 1.2400 - 1.2600 level for the time being.