USD/CAD Forecast: Bulls Lead as Investors Await FOMC Meeting

• Investors will focus on the FOMC meeting that will take place next week.

• Some sectors of the US economy have continued to show resilience.

• The Canadian dollar declined 1.4% last week.

Today’s USD/CAD forecast is bullish. USD/CAD rose at the start of the final trading week of the month as investors awaited information from several central bank meetings in May.

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Investors will focus on the FOMC meeting that will take place next week. The Federal Reserve will likely lift rates by an additional 25bps.

While recent economic data have indicated sluggish US growth, some sectors of the economy have continued to show resilience. Inflation has remained sticky. Traders are also discussing the magnitude of rate cuts anticipated as early as July through the end of the year.

On Friday, the Canadian dollar dropped to a three-week low as Canada’s retail sales data revealed that the economy is feeling the effects of rising borrowing rates.

According to data from Statistics Canada, Canadian retail sales decreased by 0.2% from January to February. Sales are projected to decrease by another 1.4% in March.

The Bank of Canada increased its benchmark interest rate to a 15-year high of 4.50% to combat inflation. The high rates increased pressure on mortgage rates following several years in which Canadians borrowed substantially to participate in a booming housing market.

The Canadian dollar declined 1.4% for the week as oil, one of Canada’s main exports, plummeted. It also fell as investors increased their bets on the Federal Reserve raising interest rates next month.

USD/CAD key events today

Investors don’t expect any key releases from the US or Canada that might increase market volatility. The price will, therefore, likely consolidate..

USD/CAD technical forecast: 1.3601 next stop for bulls

The 4-hour chart shows a continuation of last week’s trend. The price is on the brink of breaking above the 1.3550 resistance level. This break will allow bulls to target the next resistance level at 1.3601. The bullish bias here is strong because the price is firmly above the 30-SMA, and the RSI is far above the 50 mark in the overbought region.

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There is strong bullish momentum. However, the RSI is at extreme levels, which might allow bears to return for a pullback or consolidation. It would allow the SMA to catch up before the uptrend continues.

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