- USD/CAD has been oscillating in a range over the past one week, forming a rectangle.
- The range-bound price action points to indecision over the next leg of a directional move.
- Neutral oscillators further warrant some caution for aggressive traders ahead of FOMC.
The USD/CAD pair remained depressed through the early North American session and moved little following the release of US Retail Sales/Canadian consumer inflation figures. The pair was seen flirting with daily lows, around 200-hour SMA or levels just above mid-1.3100s.
Looking at the technical picture, the pair has been oscillating in a range over the past one week or so, forming a rectangle on short-term charts. The formation exhibits indecision between buyers and sellers, warranting some caution before placing any aggressive directional bets.
Moreover, neutral technical indicators on daily/hourly charts haven't been supportive of any firm near-term direction. The set-up further makes it prudent to wait for a sustained breakthrough the recent trading range as the focus remains on the highly anticipated FOMC decision.
Some follow-through weakness below the 1.3135-30 horizontal support will be seen as a fresh trigger for bearish traders. The pair might then turn vulnerable to break below the 1.3100 mark and accelerate the slide further towards the recent daily closing lows support near the 1.3045 region.
Conversely, bullish traders might still need to wait for a sustained move beyond the 1.3200 handle, above which the pair is likely to jump back to monthly tops, around the 1.3260 region. The subsequent momentum has the potential to lift the pair further towards the 1.3300 round-figure mark.
USD/CAD 1-hourly chart
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Technical levels to watch
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