USD/CAD rises to 1.34, Federal Reserve on deck

After starting the week with losses, the Canadian dollar has reversed directions on Tuesday. Currently, the pair is trading at 1.3399, up 0.32% on the day.

Does the Fed have more easing up its sleeve?

The Fed has mobilized to steady the US economy in the wake of the Covid-19 pandemic. Policymakers slashed interest rates close to zero and have pumped trillions of dollars into financial markets. These easing measures have weighed on the US dollar, as major currencies continue to rack up gains and gold is pressing on the lofty USD200o mark. The Canadian dollar has also managed to make inroads against its US cousin, gaining 4.9% since April 1.

The Fed holds its monthly policy meeting on Wednesday, and there is speculation that the Fed will introduce further easing measures, which could push the greenback lower. There have been calls by some Fed members to implement negative interest rates, a move that has been adopted by the ECB and the Bank of Japan. Such a move would be a first for the Fed, and Fed Chair Jerome Powell has said that the negative rates are not on the table of options. Any new moves by the Fed will be closely scrutinized, and we could see some stronger movement from the sleepy Canadian dollar on Wednesday.

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USD/CAD Technical

USD/CAD posted gains in the Asian session. The pair recorded slight losses in European trade and this trend has continued in North American trade

  • 1.3407 was tested in resistance late in the Asian session. Above, we find resistance at 1.3457
  • 1.330 is the first line of support, followed by support at 1.3303.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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