USD/CAD a touch heavier despite benign FOMC, sticking to the script

• USD/CAD has dropped to below the 1.34 handle, reaching a low of 1.3377 following the FOMC statement and ahead of the presser.
• USD/CAD is currently trading at 1.3393 between a range of 1.3377 the low and 1.3431. 

Markets were already positioned for a benign outcome and had been exiting dollar longs solely on the basis of recent data that aligns with the dovish stars. A rate cut is expected from the Fed in due course, but the key takeaway from today's statement is one of patience again -  Fed is to stay patient on rates as the economy is solid and inflation is muted.

Let's now wait for and see what Powell has to say - You can follow the presser here:

• Fed press conference: Jerome Powell speech live stream - May 1

Looking back at the prior FOMC statement and comparing to the new statement, we can see is remains basically consistent with the Fed's script:

Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.

USD/CAD levels

The price has been rejected from space towards the 78.6% Fibo of Dec-now range. The move back within the symmetrical triangle has nullified the potential for a 220 pip symmetrical triangle breakout from the 1.3416 breakout point - The non committed bulls cashed-in already and the price is on the verge of a test down to the 50% Fibo. Should this level hold, considering we are in a broader bullish channel of which the downside was recently exhausted, a resurgence in the greenback will likely lift the pair back towards the top side of the ascending channel's resistance over time, once a stubborn resistance area between 1.3470 and the 78.6% Fibo is cleared.  On the flip side, however, a break below the 38.2% Fibo that will bring in the 23.6% Fibo and trendline support (and 200-D SMA) where a break out opens risk back to 1.3070 support and 1.2780 below there.

For further analysis, see last week's 'USD/CAD Forecast':

• USD/CAD Forecast: Symmetrical Triangle bullish breakout opens risk to 1.3630s, fundamentals apply (but so far marry-up)