The USD/CAD has extended the earlier gains of the day following the decision of the Federal Open Market Committee (FOMC) of the US Federal Reserve to raise interest rates by 75 basis points, thus meeting market expectations. This move ended days of speculation as to whether the Fed could go even further by 100 basis points. The USD/CAD is now trading 0.21% higher a few hours after the announcement.
The USD/CAD had ended the 21 September trading day by 98 pips to the green after the Loonie was hit by massive risk-off sentiment following the announcement of the active deployment of 300,000 reservists in Russia to join the combat zone in Ukraine. The escalation promoted a rush into the safe-haven greenback, sending the USD/CAD to its highest levels in two years. As a consequence, bond yields in Canada eased across the curve.
With the increase in interest rates, the USD/CAD is expected to extend its gains into the weekend. It presently looks on course to hit a third straight day of gains, having gained 0.46% as of writing.
USD/CAD Forecast
Having cleared the 1.33756 resistance, the USD/CAD has clear skies to aim for 1.35117 (17 May 2019 high and 18 June 2020 low). The pair is currently violating this barrier and needs to fulfil the time/price filters for a breakout to uncap this resistance. If the bulls uncap this barrier, the 1.35977 resistance (20 July 2020 high) comes into the mix. An additional price target is 1.36621, where the prior high of 2 January 2019 is found.
Only a rejection of the advance at 1.35117 would stall the uptrend. This clears the way for a correction that aims for 1.33756 initially, before 1.32109 (7/14 September 2022 highs) enters the mix as another downside target if the correction is more extensive. The 7 July and 23 August 2022 highs at 1.30605 form another target to the south, while 1.29121 (22 June and 26 August lows) only becomes available if the corrective decline extends below the 1.30000 psychological price mark.
USD/CAD: Daily Chart
