- US dollar posts mixed results as FOMC meeting kicks off.
- Loonie turns positive against US dollar, remains negative against AUD and NZD.
- USD/CAD: Bullish bias but capped by 1.2900.
The USD/CAD pulled back more than 50 pips from daily highs and turned negative. The pair hit a five-day high at 1.2871 on Wednesday and at time of writing trades at 1.2799, the new daily low.
The pullback came amid improving market sentiment and even as crude prices extended losses. The WTI barrel is falling almost 9%.
US economic data showed a rise in the producer price index to 10% (annual), the highest level in decades, and a sharp drop in the Empire manufacturing index for February. The figures had little impact on the dollar as market participants focused on the two-day Federal Reserve meeting and the war in Ukraine.
The FOMC is expected to raise the key interest rate for the first time since 2018, in a complex environment with high inflation, supply disruptions, a war in Ukraine and soaring crude oil prices. The tone of the statement and Chairman Powell’s words are likely to trigger volatility in financial markets. Also, Canadian inflation data will be released on Wednesday.
1.2900 area still key
A weekly close above 1.2900 should trigger further gains in the medium term, favoring a rally above 1.3000. The same chart shows relevant support around 1.2700, the 20-week simple moving average, a consolidation below should weaken the dollar, exposing next supports at 1.2580 and 1.2445.
Technical levels
Source: Fx Street
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