USD/CAD rebounds from one-month lows toward 1.2900 amid risk aversion
- 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 area.
The USD/CAD rebounded sharply after hitting 1.2814, the lowest level in six weeks. It printed a fresh daily high at 1.2888, boosted by a stronger US Dollar across the board.
Dollar wakes up
After falling for three consecutive days, the dollar is up across the board. It woke up the day the FOMC began its two-day meeting, amid a deterioration in market sentiment. The Fed is expected to hike rates by 75bp, as it did in June. “In doing so, the Committee would bring the policy stance to its estimate of neutral. We also look for Chair Powell to retain optionality by leaving the door open to additional 75bp rate increases”, said analysts at TD Securities.
On Wall Street the Dow Jones is falling by 0.66% and the Nasdaq is declining by 1.75%. Crude oil prices are losing more than 0.50% after being unable to hold onto gains. The DXY is up 0.65%, back above 107.00.
Technical outlook
The decline of the USD/CAD found support at 1.2815 and rebounded above 1.2850 like what happened back late in June. A daily close clearly below 1.2845 should open the doors to more losses.
The pair's rebound could point that a short-term bottom is in place. Near 1.2900 is the immediate resistance, followed by the 1.2945/50 area that also contains the 20-day moving average.
Technical levels