The US Dollar (USD) fell moderately against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than 1.2300 ahead of the US Monetary Policy announcement which is expected to incite high volatality accorss the financial markets. The technical bias however still remains bearish due to a Lower Low and Lower High in the recent wave on daily chart.
As of this writing, the pair is being traded around 1.2295. A hurdle may be noted near 1.2300, the confluence of pychological number as well as intraday high of yesterday ahead of 1.2315, a major horizontal support turned resistance and then 1.2345, the high of the last major upside rally.
On the downside, the pair is likley to find a support around 1.2280, the low of the recent downside move ahead of 1.2000, the confluence of pychological number as well as low of the last major dip as demonstrated in the above daily chart. The technical bias will however remain bearish as long as the 1.2345 resistance area is intact.
US Monetary Policy Announcement
On Forex Calendar, the Federal Reserve is due to announce its monetary policy today. According to the average forecast of different economists, the US Central Bank is expected to keep its benchmark interest rate unchanged at 0.25%. The event will include the release of Monetary Policy Statement as well as press conference by the Fed Chief Jannet Yellen. Investors will be eying Yellen’s remarks very closely to gauge the future monetary policy outlook of the Worlds’ largest economy. A hawkish stance by the Fed boss may incite huge bullish momentum in the US Dollar Index.
Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term if we get a bearish pin bar or bearish engiulfing candle on daily chart.