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.
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.
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