USD/CAD Reverses Ahead of 2022 High with Fed Rate Decision on Tap
USD/CAD appears to be reversing ahead of the 2022 high (1.3978) as the Relative Strength Index (RSI) falls back from overbought territory.
Share this:
US Dollar Forecast: USD/CAD
USD/CAD appears to be reversing ahead of the 2022 high (1.3978) as the Relative Strength Index (RSI) falls back from overbought territory, and the Federal Reserve interest rate decision may drag on the exchange rate as the central bank is expected to deliver a 25bp rate cut.
USD/CAD Reverses Ahead of 2022 High with Fed Rate Decision on Tap
USD/CAD pulls back from a fresh yearly high (1.3959) after showing a limited reaction to the US Non-Farm Payrolls (NFP) report, and the move below 70 in the oscillatory is likely to be accompanied by a further decline in the exchange rate like the price action from earlier this year.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
In turn, the opening range for November is in focus as USD/CAD comes under pressure going into the US election, and it remains to be seen if the upcoming change to fiscal policy will influence the Federal Open Market Committee (FOMC) as the central bank moves towards a neutral stance.
US Economic Calendar
The FOMC is anticipated to lower interest rates for the second consecutive meeting as Chairman Jerome Powell and Co. project that ‘the appropriate level of the federal funds rate will be 4.4 percent at the end of this year,’ and the central bank may continue to prepare US households and businesses for a less restrictive policy in an effort to avoid a recession.
With that said, the advance from the October low (1.3473) may continue to unravel as the recent decline in USD/CAD pulls the RSI back from overbought territory, but the exchange rate may stage further attempts to test the 2022 high (1.3978) if the FOMC delivers a hawkish rate-cut.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- Keep in mind, USD/CAD cleared the August high (1.3947) as it marked a five-week rally for the first time since January, but the exchange rate initiates a series of lower highs and lows as it struggles to test the 2022 high (1.3978).
- A break/close below the 1.3810 (161.8% Fibonacci extension) to 1.3850 (50% Fibonacci extension) zone may push USD/CAD back towards 1.3700 (38.2% Fibonacci extension), with the next area of interest coming in around 1.3630 (38.2% Fibonacci retracement).
- Nevertheless, lack of momentum to close below 1.3900 (50% Fibonacci extension) may lead to further attempts to test the 2022 high (1.3978), with a break/close above the 1.3970 (61.8% Fibonacci extension) to 1.4000 (61.8% Fibonacci extension) region opening up the 1.4040 (23.6% Fibonacci retracement) to 1.4080 (78.6^ Fibonacci extension) area.
Additional Market Outlooks
Monetary vs Fiscal Policy: Implications for FX Markets
Euro Forecast: EUR/USD Recovery Persists Ahead of Euro Area CPI Report
British Pound Outlook: GBP/USD Recovery Emerges Ahead of UK Budget
USD/JPY Forecast: RSI Continues to Flirt with Overbought Zone
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD weekly outlook: FOMC and ECB to set the tone
The current backdrop is modestly bearish. On Friday, the EUR/USD closed modestly lower, down for the third consecutive day. The pair also posted a weekly decline after staging a modest recovery attempt in the previous week. Out of the past 8 weeks, the EUR/USD has fallen on 6 occasions. There is not much supporting factors for the single currency right now. So, the upside remains capped.
Silver forecast: metals liquidation drags XAG/USD into $50-55 support
Silver has broken its July low and slipped into a long-term support zone as the selling in precious metals deepens. The chart shows where the metal could bottom, and next week's Fed decision may decide whether it does.
S&P 500 forecast: AI linked stocks remain under pressure
And just like that, it is Friday again and the end of a volatile week. Today offers little on the macro calendar to change the prevailing narrative, leaving markets largely at the mercy of risk appetite, oil prices and the growing unease around the AI trade.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.