USD/CAD Price Prediction – Test Of Support At 1.2850

Key Insights

• The rebound in the oil markets provided support to commodity-related currencies. 
• Traders will likely remain cautious ahead of the Fed meeting. 
• A move below the support at 1.2850 will push USD/CAD towards the next support level at 1.2825.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently trying to settle below 1.2850 as oil markets rebound. WTI oil managed to find some support at the start of the week, which was bullish for commodity-related currencies, including Canadian dollar.

This week, all currency traders will focus on the Fed Interest Rate Decision, which will be released on Wednesday. While forex traders will still react to economic news or developments in other markets, the results of the Fed meeting will determine the currency market dynamics for the upcoming weeks.

USD/CAD may fail to gain sustainable momentum ahead of Wednesday as traders will be cautious. The Fed is expected to raise the rate by 75 bps, which is probably priced in by markets, but traders will also pay attention to Powell’s commentary. In case Powell is too hawkish, the U.S. dollar may move closer to yearly highs.

USD/CAD Is Moving Towards Recent Lows At 1.2825

USD/CAD managed to settle below the support at the 50 EMA at 1.2895 and is testing the next support at 1.2850. In case this test is successful, USD/CAD will move towards the next support level, which is located at the recent lows at 1.2825.

A move below the support at 1.2825 will open the way to the test of the support level at 1.2800. In case USD/CAD declines below this level, it will head towards the support at 1.2780.

On the upside, the previous support level at the 50 EMA at 1.2895 will serve as the first resistance level for USD/CAD. If USD/CAD manages to settle back above this level, it will head towards the next resistance at the 20 EMA at 1.2935. A move above this level will push USD/CAD towards the resistance at 1.2970.

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