- US dollar strengthens across the board as FOMC meeting kicks off.
- Risk aversion weighs on the Canadian dollar.
- USD/CAD finds support again at the 1.2815/30 zone.
The USD/CAD rallied strongly after touching 1.2814, the lowest level in six weeks. She hit a fresh daily high at 1.2888, buoyed by a stronger US dollar overall.
The dollar wakes up
After falling for three consecutive days, the dollar is up across the board. He woke up the day the FOMC began its two-day meeting, amid deteriorating market sentiment. The Fed is expected to raise rates by 75 basis points, as it did in June. “In doing so, the Committee would bring the policy stance back to its neutral estimate. We also expect Chairman Powell to maintain the optionality leaving the door open for additional rate hikes of 75 basis points,” analysts at TD Securities said.
On Wall Street, the Dow Jones falls 0.66% and the Nasdaq 1.75%. Oil prices lose more than 0.50% after failing to hold gains. DXY is up 0.65% and is back above 107.00.
technical perspective
The USD/CAD decline found support at 1.2815 and bounced back above 1.2850, as it did in late June. A daily close clearly below 1.2845 should open the door for more losses.
The pair’s bounce could indicate that a short-term bottom has been reached. Near 1.2900 is immediate resistance, followed by the 1.2945/50 area which also contains the 20-day moving average.
Technical levels
Source: Fx Street
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