By Ketki Saxena
Investing.com -- The Canadian dollar held close to 9-month highs today, even as the US dollar strengthened against most major currencies on an uptick in risk aversion, as bets remain high for the Bank of Canada to match the pace of rate-hikes set by the US Federal Reserve.
Analysts at Commerzbank (ETR:CBKG) note, "We see further limited CAD recovery potential against the USD due to the robust economy and a hawkish BoC. CAD should benefit if the interest rate differential between the Fed and the BoC narrows or turns positive in the medium term."
The commodity linked loonie appeared to shrug of pressure from crude prices, which fell on hawkish indicators from the Fed and an unexpected hike from the Bank of England and several other cenbanks, as investors begin to consider the possibility that this monetary policy tightening cycle still has a ways to go.
On a technical level for the pair, analysts at FX Street note, "The momentum indicators currently suggest that near-term risks are tilted to the downside.. Should the bears try to push the price lower, initial support could be met at the recent 9-month low of 1.3137. Piercing that wall, the pair could dive towards 1.3074 or lower to challenge the September 2022 bottom of 1.2960. Further declines could then come to a halt at the August 2022 low of 1.2727."
"On the flipside, if the price reverses to the upside, a bunch of previous support levels could serve as resistance in the future. More precisely, the pair could advance towards the November 2022 support of 1.3225 before the February low of 1.3262 gets tested. Even higher, the May support of 1.3319 may curb any upside attempts."
For the week, the CAD closed little changed against the US dollar and remains close to its fair value target. Up next for the pair, investors will be closely watching for next week's Canadian CPI report for further insight on the BoC's next move.