As the USD/CAD pair continues its downward trend for the fourth consecutive trading session, investors are eagerly anticipating the release of the FOMC minutes for clues on future interest rate movements. Despite facing multiple challenges, the Canadian Dollar is outperforming the US Dollar, leading to a weakening of the Loonie asset.
One of the main factors supporting the Canadian Dollar is the resilience in the face of falling oil prices. Speculation of a potential ceasefire between Iran and Israel, along with easing price pressures, has raised expectations of further interest rate cuts by the Bank of Canada (BoC).
On the other hand, the US Dollar Index (DXY) is hovering near a seven-month low of 101.30 against a basket of major currencies. The upcoming release of the FOMC minutes at 18:00 GMT is expected to have a significant impact on the future direction of the US Dollar.
Looking ahead, investors will closely monitor Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium for insights into the Fed’s monetary policy stance. While a clear rate cut path may not be provided, Powell is likely to signal a move towards policy normalization in September, aligning with market expectations.
Technical analysis of the USD/CAD pair indicates vulnerability near the 1.3600 support level, with the 20-day Exponential Moving Average (EMA) sloping downwards. The 14-day Relative Strength Index (RSI) also suggests a strong downside momentum in the near term.
If the pair breaks below the April 9 low of 1.3540, further downside towards the psychological support of 1.3500 and the March 21 low of 1.3456 is expected. Conversely, a recovery above the August 12 high of 1.3750 could push the pair towards the resistance levels of 1.3800 and 1.3840.
USD/CAD Daily Chart
Canadian Dollar FAQs
For those interested in understanding the factors that drive the Canadian Dollar (CAD) and its relationship with the global economy, here are some frequently asked questions:
- Interest rates set by the Bank of Canada (BoC)
- Impact of Oil prices on the CAD
- Health of the Canadian economy
- Inflation and Trade Balance
By analyzing these key factors, investors can gain a better understanding of the dynamics influencing the value of the Canadian Dollar and make informed decisions in the forex market.