USD/CAD Rises Ahead of FOMC Decision Amid Shifting Factors
The USD/CAD pair continues its upward momentum, setting the stage for an interesting trading day, with a focus on the upcoming Federal Open Market Committee (FOMC) policy decision. The spot price has been edging higher, currently trading around 1.3887 during the London session, as of the time of writing.
One of the key factors driving this movement is the improved risk appetite in the market, especially as traders await the FOMC's monetary policy decision. The recent trend shows the price retraced to test a previous support level, creating a swing higher and forming a pattern indicative of a potential bullish impulse. The next target for traders is the 1.3960 level.
The US Dollar Index (DXY) has also experienced an upswing, benefiting from increased US Treasury yields. The 10-year US bond yield has reached 4.90% by the press time, influencing the DXY to hover around 106.70. Market sentiment is leaning towards expectations that the Fed will maintain its current interest rate at 5.5% in the upcoming meeting. However, the tone set by the Federal Open Market Committee (FOMC) regarding future interest rate trajectories remains a significant variable to watch. A hawkish statement from the FOMC could potentially strengthen the US Dollar (USD) further.
Geopolitical concerns related to the conflict between Israel and Hamas have added some uncertainty to global markets. While this situation has the potential to disrupt oil supplies from the Middle East, it's noteworthy that crude oil prices have actually fallen to two-month lows. Western Texas Intermediate (WTI) is currently trading below $81.00 per barrel. The drop in oil prices exerts pressure on the Canadian Dollar (CAD), further benefiting the USD/CAD pair.
Furthermore, on the economic front, the monthly Canadian GDP data released on Tuesday showed no growth, with the figure remaining flat at 0.0% for August. This underwhelming economic performance may have contributed to undermining the commodity-linked Loonie Dollar (CAD) and acted as an additional tailwind for the USD/CAD pair.
The USD/CAD pair continues its upward momentum, setting the stage for an interesting trading day, with a focus on the upcoming Federal Open Market Committee (FOMC) policy decision. The spot price has been edging higher, currently trading around 1.3887 during the London session, as of the time of writing.
One of the key factors driving this movement is the improved risk appetite in the market, especially as traders await the FOMC's monetary policy decision. The recent trend shows the price retraced to test a previous support level, creating a swing higher and forming a pattern indicative of a potential bullish impulse. The next target for traders is the 1.3960 level.
The US Dollar Index (DXY) has also experienced an upswing, benefiting from increased US Treasury yields. The 10-year US bond yield has reached 4.90% by the press time, influencing the DXY to hover around 106.70. Market sentiment is leaning towards expectations that the Fed will maintain its current interest rate at 5.5% in the upcoming meeting. However, the tone set by the Federal Open Market Committee (FOMC) regarding future interest rate trajectories remains a significant variable to watch. A hawkish statement from the FOMC could potentially strengthen the US Dollar (USD) further.
Geopolitical concerns related to the conflict between Israel and Hamas have added some uncertainty to global markets. While this situation has the potential to disrupt oil supplies from the Middle East, it's noteworthy that crude oil prices have actually fallen to two-month lows. Western Texas Intermediate (WTI) is currently trading below $81.00 per barrel. The drop in oil prices exerts pressure on the Canadian Dollar (CAD), further benefiting the USD/CAD pair.
Furthermore, on the economic front, the monthly Canadian GDP data released on Tuesday showed no growth, with the figure remaining flat at 0.0% for August. This underwhelming economic performance may have contributed to undermining the commodity-linked Loonie Dollar (CAD) and acted as an additional tailwind for the USD/CAD pair.
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Our preference
Long positions above 1.38250 with targets at 1.39300 & 1.39600 in extension.