USD/CAD flat ahead of Fed decision

After starting the week with losses, the Canadian dollar has reversed directions on Tuesday. Currently, the pair is trading at 1.3371, down 0.05% on the day. There are no Canadian releases until Friday, so any movement from USD/CAD will be driven by events stateside, such as the Federal Reserve rate decision later on Wednesday.

 

Will the Fed implement more easing?

Later in the day, the Federal Reserve will announce its rate decision. The Fed is widely expected to leave the benchmark rate between 0-0.25%, so traders will be more interested in the rate statement. Fed Chair Powell has insisted that negative rates are not an option, but the Fed is likely to maintain an ultra-accommodative stance until the US economy shows unmistakable signs that it is on the path to recovery. This means that the Fed decision is likely to be a sleeper as far as the markets are concerned, unless the Fed surprises everyone with further easing measures.

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 and the Canadian dollar has also jumped on the bandwagon, gaining 5.0% since April 1.

 

USD/CAD Technical

 

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

  • 1.3560 is the next major line of resistance. Above, we find resistance at 1.3704
  • 1.3311 is the first line of support, followed by support at 1.3206.

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.