USD/CAD remains under pressure with a new target at 1.3220

The USD/CAD exchange rate is under selling pressure in the early Asian trading hours on Tuesday. Canada's Gross Domestic Product (GDP) for November, expected to expand by 0.1% compared to the previous month, will be released on Wednesday. The pair remains under pressure as the Federal Open Market Committee (FOMC) meeting on Wednesday approaches, with no expectations of changes in interest rates. Currently, USD/CAD is traded at 1.3510, down 0.01% for the day. The US Core Personal Consumption Expenditures Price Index (PCE) for December increased by 0.2% from the previous month, with an annual increase of 2.9%. On Monday, the Federal Reserve Bank of Dallas Manufacturing Business Index for January was -27.4. The Fed will announce its interest rate decision on Wednesday, with the possibility of a future rate cut. Geopolitical tensions in the Middle East, fueled by potential US military actions, may support the dollar as a safe-haven currency. On the Canadian front, a slight growth of 0.1% in November's GDP is expected. An increase in oil prices may support the commodity-linked Canadian dollar and act as a headwind for USD/CAD. Investors will closely watch the Fed's rate decision and seek trading opportunities around the USD/CAD pair. USD/CAD, having retraced to the 0.5% Fibonacci level on the total extension and the 0.79 level on the partial extension, has rotated well below the reversal zone, and now I expect a descent towards 1.3220.