USDCAD moves above 200 hour MA, but FOMC decision will be the driver | Forexlive

The USDCAD broke below a critical level and swing area yesterday, as well as the 50% retracement from the February 20 low, both situated at 1.3651. This swing area ranged from 1.3651 to 1.3665. Yesterday’s low reached 1.3643 but rebounded quickly. The break was expected to lead to a lower price, but instead, it bounced back, testing the 200-hour moving average (MA) near North American session highs at 1.3736. Sellers leaned against the MA, causing a slight downward rotation.

During North American trading today, USDCAD began to rise following consolidation in the Asian and London morning sessions. The high price has stalled against the declining 200-hour MA but just broke above this crucial level at 1.37221. However, with the upcoming FOMC rate decision, this break might not be highly relevant, as the decision will likely influence the USD’s trajectory.

The market currently prices in an 80% chance of a 25 basis point rate hike by the Fed. Nonetheless, factors like the dot plot, central tendencies, and the Fed chair’s tone in answering reporters’ questions will ultimately determine the USD’s fate. The 100 and 200-hour moving averages will serve as bullish or bearish bias indicators for traders—being above these levels indicates a bullish trend, while being below implies a bearish trend.

On the upside, the next targets are Friday’s and Thursday’s highs at 1.3745 and 1.3772, respectively. Breaking these levels could lead traders to push towards the swing area between 1.3807 and 1.38164 (red numbered circles on the chart). A move above this area would have traders aiming for the March high at 1.38614.

On the downside, the focus should be on the 1.3651-1.3665 area. Remaining below this range could open the door for a move towards the 1.36014 level (61.8% retracement and natural support level).