The USD/CAD pair will be in the spotlight on Wednesday as the Federal Reserve and the Bank of Canada (BOC) deliver their interest rate decisions. The USD to CAD price is trading at 1.2600, which is a few points below this week’s high of 1.2700.
The Bank of Canada will deliver its interest rate decision during the American session. Analysts expect that the bank will sound a bit hawkish in its first decision of the year. Precisely, they expect that the bank will hike interest rate by 0.25% and point to more rate hikes this year. This view is based by the fact that the Canadian economy is doing well, with inflation surging and the unemployment rate falling.
The USD/CAD pair will next react to the latest interest rate decision by the Federal Reserve that will come out later today. Economists expect that the bank, unlike the BOC, will not hike interest rates in this meeting. Instead, the bank will signal that it will start hiking interest rates in March.
There is still division among analysts about the number of rate hikes that the Fed will implement this year. Some analysts expect that the bank will implement about 3 hikes while others expect that there will be four hikes this year.
USD/CAD forecast
The four-hour chart shows that the USDCAD pair has been under pressure in the past few sessions. It has dropped from a high of 1.2700 to the current 1.2600. The price is slightly above the 25-day and 50-day exponential moving averages (EMA). it is between the ascending channel shown in black while the Relative Strength Index (RSI) has retreated.
It has also formed a small falling wedge pattern, which is usually a bullish sign. Therefore, there is a likelihood that the price will bounce back and test the key resistance at 1.2700. This view will be invalidated if the price moved below the support at 1.2500.
