USD/CAD Holds Above 1.3770 as Fed and BoC Decisions Loom.
USD/CAD steadies near 1.3770 as markets await rate decisions from the Fed and BoC
FUNDAMENTAL OVERVIEW:
The U.S. Dollar remains firm near recent highs against the Canadian Dollar after a four-day rally, with traders awaiting monetary policy announcements from the Federal Reserve and Bank of Canada later today.
USD/CAD is consolidating above 1.3770 in early European trading, having climbed nearly 1.5% from last week’s low of 1.3575. The rally is supported by strong U.S. economic data and renewed optimism following trade agreements with key partners.
Markets are also watching the Preliminary U.S. GDP release, expected to show a strong 2.4% annualized growth rebound from the prior quarter’s 0.5% contraction. If confirmed, alongside solid ADP jobs data, the Fed may have further justification to hold rates steady as it evaluates the impact of Trump’s tariffs.
Meanwhile, the Bank of Canada is also expected to keep rates unchanged, but with a more dovish tone. Persistently low inflation and a weakening labor market could weigh on the Canadian Dollar, adding downside pressure.
USD/CAD TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/CAD is trading within an up channel.
USD/CAD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 1.3840
Immediate support level: 1.3731
HOW TO TRADE USD/CAD
The USD/CAD pair experienced a sharp decline before establishing support and reversing higher. It then traded within a defined range. Now, USD/CAD is demonstrating bullish momentum, evidenced by a breakout above both its trendline and the previous week’s high. While a pullback is likely, a sustained hold above the trendline support would suggest a continuation of the uptrend towards the next significant resistance.