FXOpen
The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Monday, dragging the price of USDCAD to less than 1.3150 ahead of the monetary policy announcement from the Federal Reserve. The technical bias, however, remains bullish because of a Higher High in the recent upside rally.
Technical Analysis
As of this writing, the pair is being traded near 1.3148. An immediate support can be seen around 1.3145, a major horizontal support ahead of 1.3100, the psychological number and then 1.3028, which is another key horizontal support area.
On the upside, the pair is expected to face a hurdle near 1.3200, the confluence of a horizontal resistance as well as the psychological number ahead of 1.3247, the swing high of the recent upside rally as demonstrated in the above chart. A break and four-hour closing above the 1.3247-50 resistance area could incite the renewed bullish momentum, validating an upside rally towards the 1.3300 region in the long run.
Fed Monetary Policy
The two-day Federal Open Market Committee (FOMC) meeting is due tomorrow. Investors are carefully waiting for the interest rate decision by the central bank of the world’s largest economy. There are some hopes that the Federal Reserve may announce a hike in benchmark interest rate. If it happens, the dollar would skyrocket, rallying USDCAD pair to more than 1.4000 in the near future. However, if the central bank leaves interest rate unchanged once again, then it would be seen as bearish for the US Dollar and we could see continuity of the ongoing bearish trend in the USDCAD pair.
Trade Idea
Considering the overall technical and fundamental outlook, buying the USDCAD pair on dips still appears to be a good strategy in short to medium term.
Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Stay ahead of the market!
Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.
Latest articles
Commodity Currencies Pull Back Ahead of Fed And Bank of Canada Decisions
The AUD and CAD are trading in corrective mode, reflecting market caution ahead of today’s Federal Reserve and Bank of Canada meetings. Investors are locking in some profits after a volatile start to the week and prefer to wait
Broadcom (AVGO) Shares Hit a Record Ahead of Earnings
Broadcom (AVGO) shares reached an all-time high ahead of the company’s quarterly results, due this Thursday, supported by strong fundamental drivers:
→ Partnership with Microsoft: Media reports suggest Broadcom is in talks with Microsoft to develop custom AI chips.
→ Analyst
USD/CAD Recovers From a 2.5-Month Low
The main driver of the decline was a sharp shift in sentiment and diverging expectations for policy actions in the United States and Canada.
→ Canada: Friday’s employment data came in far stronger than forecast. As a result, traders sharply