- Investors evaluated potential further tightening by the Federal Reserve in September.
- The Fed increased its benchmark overnight rate by 0.25 percentage points.
- In their recent meeting, the BOC discussed possibly delaying a rate hike.
Today’s USD/CAD forecast is bearish. The pair extended declines from the previous session as investors evaluated potential further tightening by the Federal Reserve in September. This followed the latest rate hike by the US central bank.
–Are you interested in learning more about Canadian forex brokers? Check our detailed guide-
Notably, Powell stated that the Fed would make monetary policy decisions on a meeting-by-meeting basis. Consequently, there were fluctuations on Wall Street and a drop in bond yields.
Before this, the central bank had increased its benchmark overnight interest rate by 0.25 percentage points, setting it at 5.25% to 5.50%.
Simultaneously, the Bank of Canada had also been raising interest rates. In their recent meeting, they discussed possibly delaying a rate hike. Still, they decided to proceed to ensure that progress in curbing inflation remained steady, according to the meeting minutes published on Wednesday.
On July 12, the bank declared a 25 basis point rate increase, reaching a 22-year high of 5.0%. Additionally, it revised its growth forecast for 2023 upwards and extended its expectations for achieving a 2% inflation target to mid-2025.
During the deliberations, the six governing council members debated whether raising the rate in July was suitable or waiting for more evidence. Ultimately, the consensus was that the disadvantages of postponing the action outweighed the benefits of waiting, as stated by the BoC in the summary of deliberations or minutes.
USD/CAD key events today
Investors expect several key data points from the US, including the core durable goods orders, GDP, initial jobless claims, and pending home sales.
USD/CAD technical forecast: Strong rejection at 1.3225 triggers dip below 30-SMA.
On the charts, the price has crossed below the 30-SMA after finding strong resistance at the 1.3225 level. USD/CAD is trading in a range in the 4-hour chart with support at 1.3150 and resistance at 1.3225.
–Are you interested in learning more about high leveraged brokers? Check our detailed guide-
The bias within the range area is bearish because the price trades below the 30-SMA with the RSI under 50. Therefore, bears will likely soon retest the range support at 1.3150. With enough momentum, the price will break below to retest the 1.3100 support level.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Share
Saqib Iqbal
