On Monday, the USD/CAD pair hit its highest levels in more than 11 years. The demand for the US Dollar is strong ahead of the Fed meeting. The Canadian Dollar , in its turn, is under enormous pressure from falling oil prices.
Most investors expect a hike in US interest rate by 0.25 basis points. It is the tone of Fed’s Chair Janet Yellen’s comments that still raises doubts. If she points to a slow-paced series of rate increases, the USD will strengthen slightly. Otherwise, in case of a more hawkish view, a surge in the USD is expected.
Consumer Price Index is due today in the US. In monthly terms, zero is expected; in annual terms, analysts forecast an increase from 0.2% to 0.4%. More positive data will strengthen the USD.
Later on, BoC Governor Stephen Poloz gives his speech. Low oil prices are strongly affecting the country’s economy, and the Regulator might reduce its interest rate to minus -0.5%. If such a possibility is confirmed, the CAD would weaken more against the USD.
Support and resistance
On the , a pattern has formed that suggests the possibility of a downward correction.
Support levels: 1.3675, 1.3623, 1.1355.
Resistance levels: 1.3780, 1.3823, 1.3900.
Long positions can be opened above the level of 1.3785 with targets at 1.3825 and 1.3900.
Short positions can be opened below the level of 1.3675 with targets at 1.3630 and 1.3560.