USD/JPY and USD/CAD Near Key Levels Ahead of Central Bank Meetings

The US dollar is trading mixed against its major counterparts following a sustained rally last week. The market is now entering a phase of moderate correction, as investors adopt a wait-and-see approach ahead of key macroeconomic releases and central bank decisions that could determine the next direction in the FX market.

Market participants are focused on the upcoming Federal Reserve decision, updated FOMC economic projections, and the Bank of Canada meeting. Additional influence is coming from US inflation and producer price data, as well as statistics on industrial orders and commodity markets.

Geopolitical tensions remain another source of uncertainty, continuing to impact commodity markets and demand for safe-haven assets. Reports of renewed escalation in the Middle East and risks to energy supply routes are increasing volatility in the oil market, which in turn directly affects the Canadian dollar.

USD/JPY

The USD/JPY pair, after an extended rally, has approached key resistance levels and shifted into a corrective decline. The downside move remains limited so far and is largely driven by profit-taking ahead of major fundamental events.

Technical analysis suggests the potential for a deeper pullback if the price firmly settles below 158.70. However, a break above the recent high at 159.70 would signal a possible continuation of the primary upward trend.

Key events for USD/JPY:

• Today at 14:30 (GMT+2): US Producer Price Index (PPI);
• Today at 20:00 (GMT+2): Federal Reserve interest rate decision;
• Today at 20:30 (GMT+2): FOMC press conference.

USD/CAD

The USD/CAD pair has reached the upper boundary of the medium-term range at 1.3530–1.3750. Buyers have so far failed to hold above this level and extend the upward move, resulting in a pullback below 1.3700.

If US dollar-positive news emerges, a break above 1.3730 could open the way for further gains towards 1.3800–1.3820. Conversely, a rejection from current levels may lead to a retest of key support in the 1.3620–1.3650 zone.

Key events for USD/CAD:

• Today at 15:45 (GMT+2): Bank of Canada interest rate decision;
• Today at 16:30 (GMT+2): US crude oil inventories;
• Today at 16:30 (GMT+2): Bank of Canada press conference.

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