The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Wednesday during London session, dragging the price to less than 1.2800 after hitting key resistance level near 1.2820. The sentiment remains slightly bearish in short term due to a Lower High on hourly timeframe.
As of this writing, the pair is being traded near 1.2782. A huge resistance can be noted near 1.2800, the psychological level ahead of 1.2808, the trendline resistance and then 1.2819, the high of today as demonstrated in the following chart. The price already broke the short term trendline which shows steady selling pressure in near term.
On the downside, the pair is expected to find a support near 1.2782, the low of the doji candle ahead of 1.2770, the horizontal support level. The technical bias will remain bearish as long as the 1.2820 resistance area remains intact.
Fed Monetary Policy
The US Federal Reserve is scheduled to release its monetary policy today. Investors will be eyeing post-monetary policy press conference very closely for any clues about the rate hike. Analysts are however unanimous that the central bank will keep its interest rate unchanged in today’s monetary policy amid low inflation outlook. Any hawkish statement from the Federal Reserve may however incite huge volatility in the price of US Dollar Index and consequently in USDCAD.
Considering the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy in short to medium term. The target may be around 30 pips. It is always suggested to use proper risk and reward ratio to optimize your return in the long run.