The USD/CAD currency pair is trading with a mild downside bias ahead of the Bank of Canada’s (BoC) interest rate decision, scheduled for 13:45 GMT. At the time of reporting, USD/CAD is trading around 1.3672, with the Canadian Dollar (CAD) modestly outperforming the US Dollar (USD), supported by rising oil prices, which typically benefit the commodity-linked Loonie [1]. The US Dollar Index (DXY) is consolidating minor gains and is quoted around 98.70 as traders also anticipate the Federal Reserve’s (Fed) monetary policy announcement later in the day at 18:00 GMT [1].
Both the BoC and the Fed are widely expected to keep interest rates unchanged as policymakers evaluate the impact of rising energy prices on inflation expectations. Market participants are focused on forward guidance from both central banks, with any indication that the BoC remains open to further rate hikes seen as supportive for the CAD. Conversely, the Fed’s stance will be pivotal for the USD’s direction [1].
Technical analysis indicates that USD/CAD maintains a bearish near-term tone, trading below key moving averages. The 100-day and 50-day Simple Moving Averages (SMAs) at 1.3730-1.3733 serve as immediate resistance, while the 200-day SMA near 1.3818 further caps the upside. Momentum indicators, including the Relative Strength Index (RSI) in the low-40s and the MACD in negative territory, reinforce the downside pressure. Initial support is identified at 1.3600, with a deeper floor at 1.3500 if selling intensifies. Bulls would need to reclaim the 100-day SMA at 1.3730 and the 50-day SMA at 1.3733 to ease the current bearish bias, with a sustained break above these levels exposing the 200-day SMA near 1.3820 as the next resistance [1].
The upcoming policy decisions from the BoC and the Fed are expected to drive volatility and near-term moves in USD/CAD. Additionally, markets are closely monitoring developments in US-Iran tensions, which could further influence market sentiment [1].
CONCLUSION
USD/CAD is trading with a bearish bias as markets await key interest rate decisions from the Bank of Canada and the Federal Reserve. The outcome and forward guidance from these central banks are expected to drive volatility in the pair, with technical indicators currently favoring further downside for USD/CAD.