- USD/CAD enters a bearish consolidation phase and oscillates in a range near a one-month low.
- Bullish Crude Oil prices underpin the Loonie and cap the upside amid subdued USD demand.
- Traders look to the Canadian CPI report for some impetus ahead of the FOMC on Wednesday.
The USD/CAD pair oscillates in a narrow range during the Asian session on Tuesday and consolidates its recent losses to over a one-month low, around 1.3470 region touched the previous day. Spot prices, however, manage to hold above a technically significant 200-day Simple Moving Average (SMA), currently pegged near the 1.3460-1.3455 area, as traders keenly await the outcome of the highly-anticipated FOMC monetary policy meeting.
The Federal Reserve (Fed) is scheduled to announce its decision on Wednesday and is widely anticipated to maintain the status quo, which keeps the US Dollar (USD) depressed below a six-month peak. Meanwhile, Crude Oil prices stand tall near the highest level since November 2022, bolstered by concerns about tighter global supplies and hopes for fuel demand recovery in China – the world's top Oil importer. This, in turn, continues to underpin the commodity-linked Loonie and acts as a headwind for the USD/CAD pair.
That said, growing acceptance that the Fed will stick to its hawkish stance and keep interest rates higher for longer in the wake of still-sticky inflation. The outlook remains supportive of elevated US Treasury bond yields and helps limit any meaningful downside for the buck. Traders might also prefer to wait for fresh cues about the Fed's future rate-hike path. Hence, the focus will remain on the ‘dot plot’ and inflation expectations, along with Fed Chair Jerome Powell's comments at the post-meeting press conference on Wednesday.
In the meantime, traders on Tuesday will look to the latest Canadian consumer inflation figures, due for release later during the early North American session. The US economic docket, meanwhile, features housing market data – Building Permits and Housing Starts. This, along with Oil price dynamics, could allow traders to grab short-term opportunities heading into the key central bank event risk, which will play a key role in driving the USD demand in the near term and determining the next leg of a directional move for the USD/CAD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.