USD/CAD may decline toward the lower boundary of the falling wedge, approximately 1.3950. The 14-day Relative Strength Index remains at approximately 45, indicating a prevailing bearish momentum. The pair is currently examining the immediate resistance confluence at the 50- and nine-day EMAs of 1.4066 and 1.4067, respectively. USD/CAD has appreciated for the third consecutive day, currently trading near 1.4060 during European hours on Wednesday. The Bank of Canada is anticipated to implement a 25-basis-point increase in interest rates later today. The technical analysis of the daily chart indicates that the pair price is contained within a falling wedge pattern, suggesting a potential bullish breakout as selling momentum diminishes.
The USD/CAD pair exhibits a bearish near-term bias as the spot price remains just below a closely grouped set of Exponential Moving Averages, with the 50-day EMA positioned near 1.4066 and the nine-day EMA around 1.4068 serving as immediate resistance levels. The USD/CAD pair has fallen below these trend indicators after struggling to maintain recent peaks, while the 14-day Relative Strength Index hovering around 45 indicates a persistent bearish momentum rather than clear oversold conditions. On the downside, the USD/CAD pair may decline toward the lower boundary of the falling wedge, approximately 1.3950. A break below the wedge could exert downward pressure on the pair, potentially leading it to the vicinity of the five-month low of 1.3732, which was recorded on May 21. Further support is positioned at 1.3481, marking the lowest level observed since October 2024.
The USD/CAD pair is currently examining the immediate resistance confluence at the 50- and nine-day EMAs of 1.4066 and 1.4067, respectively, which are in alignment with the upper boundary of the falling wedge. Further upside above this confluence would enable the pair to investigate the vicinity of an approximate 18-month peak of 1.4299, noted on October 14. Strategists expect the Fed to stay sidelined at this week’s meeting, flagging “some risk of hawkish dissents” even as policymakers refrain from moving rates. They acknowledge that “inflation remains too hot,” but argue that “declining breadth and a cooler labour market give the Fed room to wait.”
Reflecting that shift in tone, they note that markets have “sharply reduced the probability of an October hike, and December is no longer fully priced.” Nonetheless, ABN Amro still look for “one final 25bp hike in December, followed by an extended hold.” Analysts highlight that market pricing for today’s BoC decision currently implies “an 80% probability of a rate hike,” a level they argue “is not quite in done-deal territory and there is scope for a surprise.” They suggest that, while investors lean toward another move from the BoC, the outcome remains sufficiently uncertain to keep the meeting a live event for markets.
