USD/CAD Price Dips to 1.3510 as FOMC Meeting and Canadian GDP Loom
The USD/CAD price is exhibiting a downward movement in the early hours of the Asian trading session on Tuesday. Traders are bracing for Canada’s GDP data for November, anticipated to show a modest 0.1% month-over-month growth, with the release scheduled for Wednesday.
Simultaneously, market focus is trained on the upcoming Federal Open Market Committee (FOMC) meeting, where rates are expected to hold steady. Currently, the pair is positioned at 1.3510, reflecting a slight decrease of 0.01% on the day.
Inflation Data and Manufacturing Index Inform Fed Expectations
In the United States, the Core Personal Consumption Expenditures Price Index (PCE) for December reported a 0.2% monthly increase, underscoring the Fed’s preferred inflation measure’s upward trajectory.
Additionally, the U.S. Dallas Fed Manufacturing Business Index plummeted in January, intensifying the anticipation around the Fed’s rate decision. Economists are forecasting the initial rate reduction to manifest in May or June, with a potential early cut in March still in consideration.
Geopolitical tensions and commodity dynamics influence currency pairs.
Emerging geopolitical unrest in the Middle East may fortify the U.S. dollar as a haven, especially following reports of potential U.S. military actions in the region. Conversely, the Canadian dollar, closely linked to commodity markets, might find support from rising oil prices, posing a possible challenge to the USD/CAD’s momentum.
As the market awaits the Federal Reserve’s decision and accompanying monetary policy statement, due at 19:00 GMT on Wednesday, the subsequent press conference is expected to offer valuable insights.
Market participants are poised to dissect these developments for potential trading opportunities in the USD/CAD currency pair.
USD/CAD Price Forecast: Technical Outlook
The USD/CAD is trading at a subtle decline, with the latest figures showing a price of 1.34087, marking a downtrend of 0.05%. In today’s technical landscape, the currency pair’s pivot point is 1.34200, often used as a barometer for intraday directional movements.
The loonie, Canada’s dollar, is demonstrating vulnerability as it has breached a critical upward trendline at 1.34203; this violation suggests a potential for continued bearish momentum if the closing remains below this level.
Immediate resistance for the pair is established at 1.34660, with further resistance expected at 1.35233 and 1.35897. Support levels to watch are at 1.33468, 1.32803, and 1.32116, which could provide a bounce-back platform should the price slip further.
The Relative Strength Index (RSI) is currently at 36, hovering near oversold territory, indicating that sellers may lose momentum. However, the 50-day Exponential Moving Average (EMA) at 1.34305 offers a slightly bearish outlook as it resides above the current price.
Overall, the USD/CAD pair trend leans toward bearish in the short term, with the recent trendline break suggesting a potential for further declines. Traders may consider placing a sell limit order at 1.34179, aiming for a take profit at 1.33613, and placing a stop loss at 1.34597 to mitigate risk.
USD/CAD Price Live Chart
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