Current trend

Last week, the USD/CAD pair entered the sideways range of 1.3220-1.3140, within which it is currently trading.

Investors remain expectant before the US Fed meeting: it is likely that the regulator will again raise the interest rate by 25 basis points to the level of 5.5%. The most interesting are the further actions of officials, hints of which they will look for in the accompanying documents of the Federal Open Market Committee of the US Fed (FOMC), and various scenarios are possible here, since the situation in the national economy remains uncertain. On the one hand, signs of a cooling of the labor market and the construction sector, as well as weak growth in domestic demand, signal the need to complete the cycle of tightening monetary policy in order not to create excessive pressure on the economy. At the same time, maintaining high core inflation does not exclude a further increase in the cost of borrowing.

Unlike their American counterparts, the members of the Board of the Bank of Canada raised the key rate to 5.0% in July and, according to most market participants, they will keep it at this level until the end of this year, and next year they will begin to reduce the cost of borrowing. In the medium term, such a position may contribute to the resumption of the upward dynamics of the national currency.   

Support and resistance

Technically, the instrument continues to trade near the 1.3183 mark (Murray level [-1/8], Fibo retracement 38.2%). The key for the "bears" is the support zone 1.3140–1.3122, in case of its breakdown, the decline will continue to the levels of 1.3061 (Murray level [-2/8]) and 1.2975 (Fibo retracement 50.0%). When the middle line of the Bollinger Bands (1.3220) and the 1.3244 mark (Murray level [1/8]) are broken out, growth will be able to resume to the area of 1.3305 (Murray level [2/8]) and 1.3366 (Murray level [3/8]).

Technical indicators do not give a single signal: the Bollinger Bands and the Stochastic are horizontal, the MACD histogram is stable in the negative zone.

Resistance levels: 1.3244, 1.3305, 1.3366.

Support levels: 1.3122, 1.3061, 1.2975.

Trading tips

Short positions should be opened below 1.3122 with targets at 1.3061, 1.2975 and stop-loss in the area of 1.3165. Implementation period: 5-7 days.

Long positions can be opened above 1.3244 with targets at 1.3305, 1.3366 and stop-loss at around 1.3200.