Canadian Dollar languishes near two-week low as bullish USD offsets oil gains ahead of Fed

USD/CAD attracts buyers for the sixth straight day on Wednesday amid a bullish USD.
Fed rate-hike bets, surging US bond yields and geopolitical risks benefit the Greenback.
Higher oil prices could support the Loonie and cap the pair ahead of the FOMC decision.

Haresh Menghani FXStreet

The USD/CAD pair retains its positive bias for the sixth straight day, trading near the 1.3930 area, a two-week high during the Asian session on Wednesday amid a bullish US Dollar (USD). Spot prices await a breakout through the 100-day Simple Moving Average (SMA) before the next leg up as the focus remains on the outcome of a two-day FOMC policy meeting.

The US Federal Reserve (Fed) is scheduled to announce its decision later today and is widely expected to raise interest rates by 25 basis points (bps) at the end of the September 15–16 meeting. Investors will further scrutinize updated economic projections, which include the so-called dot plot, and Fed Chair Kevin Warsh's comments during the post-meeting press conference for more cues about the future policy path. The outlook, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the USD/CAD pair.

Heading into the key central bank event, the growing acceptance that the US central bank would stick to its hawkish stance amid oil-driven inflation risks remains supportive of surging US bond yields. Apart from this, escalating Middle East tensions help the safe-haven Greenback stand firm near a two-week high. The Canadian Dollar (CAD), on the other hand, is weighed down by the anticipated dovish policy stance from the Bank of Canada (BoC) and an escalating US-Canada trade war. This, in turn, is seen as another factor acting as a tailwind for the USD/CAD pair.

Meanwhile, crude oil prices consolidate near the highest level since May 20, touched on Tuesday, amid concerns about supply disruption in the Middle East. This could offer some support to the commodity-linked Loonie and hold back traders from placing fresh bullish bets on the USD/CAD pair. Hence, sustained strength and acceptance above a technically significant 100-day SMA barrier is needed to back the case for a further near-term appreciating move.

USD/CAD daily chart

Technical Analysis

The USD/CAD pair keeps a mildly bearish near-term tone as it sits just under the 38.2% Fibonacci retracement and the 100-day SMA confluence hurdle. A break above will be seen as a key trigger for bullish traders and pave the way for additional gains. On the downside, initial support emerges at the 23.6% Fibo. retracement at 1.3856, with a deeper cushion at the recent swing anchor near 1.3735.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.78%	0.53%	0.92%	1.05%	1.26%	1.94%	1.20%
EUR	-0.78%		-0.24%	0.13%	0.26%	0.50%	1.11%	0.42%
GBP	-0.53%	0.24%		0.38%	0.51%	0.76%	1.37%	0.69%
JPY	-0.92%	-0.13%	-0.38%		0.21%	0.42%	1.21%	0.35%
CAD	-1.05%	-0.26%	-0.51%	-0.21%		0.28%	1.00%	0.16%
AUD	-1.26%	-0.50%	-0.76%	-0.42%	-0.28%		0.56%	-0.01%
NZD	-1.94%	-1.11%	-1.37%	-1.21%	-1.00%	-0.56%		-0.64%
CHF	-1.20%	-0.42%	-0.69%	-0.35%	-0.16%	0.01%	0.64%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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