FOMC Outlook: USDCAD, USDJPY Hold at Key Support Levels

Key Events

• Major dollar pairs, including USDJPY and USDCAD, are holding support following expectations of a priced-in 25-bps Fed rate cut and continued FOMC uncertainty.
• Commodities — including gold, silver, and crude oil — are also holding key resistance levels ahead of the meeting, with gold’s significant lag behind silver raising caution.
• High-time-frame levels are in focus this week, aligning with expectations for the FOMC tone, the 2026 outlook, and potential holiday-season rallies.

The usual scenario of a priced-in rate cut ahead of FOMC day has already unfolded, sending the US dollar index toward key support at 98.80. Major dollar pairs such as USDJPY and USDCAD have also reached significant supports at 154.80 and 1.38, respectively.

Now, consolidation is expected to persist until FOMC day — unless key breakout levels emerge. These breakouts may define the next directional bias for the FOMC outlook, the broader holiday-period movement, and, if confirmed by high-time-frame structures, the 2026 market outlook.

Silver, Gold, S&P, Nasdaq Outlook

Source: Tradingview

Soft U.S. dollar movement pushed commodities and indices toward key levels near 2025 extremes:

• Silver surged toward all-time records near the 60 barrier.
• Nasdaq is challenging 25,800, sitting roughly 500 points below all-time highs.
• S&P 500 is hovering 40 points from record territory.
• Gold, however, is still below 4260 and more than 100 points away from its records — by far the most lagging asset relative to silver and U.S. indices.

This divergence raises intermarket caution and points to consolidation risks heading into the FOMC meeting.

USDCAD Outlook: 3 Day Time Frame – Log Scale

Source: Trading view

From a 3-day time-frame perspective, USDCAD dropped in line with the 25-bps pricing of the Fed’s upcoming rate cut, breaking below the bounds of a 7-month channel and aligning with the mid-zone support of the supplicated channel near 1.38.

• A clean hold below 1.38 is expected to extend losses toward the bottom border of the duplicated channel at 1.37, before another rebound is confirmed.
• A clean move back above 1.3970 — the neckline of the previous double-top pattern that drove November’s decline — is expected to realign gains first toward the mid-zone of the original channel at 1.4160, and later toward the upper bound at 1.42, extending the bullish bias that originated from mid-year lows.

USDJPY Outlook: 3 Day Time Frame – Log Scale

Source: Trading view

From a 3-day perspective, USDJPY is in retracement mode, retesting the upper bound of an up-trending channel extending from the April 2025 lows — effectively an 8-month resistance level that supported higher highs since May. This area may now turn into support unless price decisively breaks below 154.80.

• If the trend holds and price moves above 158, gains are expected to extend toward all-time record territory, passing through 159 and 160, in alignment with the upper bound of the duplicated channel.
• On the downside, 154.80 remains the key barrier separating bullish from bearish bias. A close below this level is expected to extend downside pressure toward 153, 151.70, and the 150 psychological level, respectively.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves