The U.S. dollar is looking cautious ahead of a key central bank decision. The USD/CAD currency exchange rate is trading in a narrow range as trade starts during the Asian trade session. This currency exchange rate is trading above 1.2815.
Today’s economic data is quite light. The headline event is the monetary policy and interest rate decision from the U.S. central bank. During North American trade hours, the Federal Open Market Committee (FOMC), the monetary policy arm of the Federal Reserve Board, will be in the spot light.
The Federal Open Market Committee not expected to change their monetary policy. This means leaving their monthly asset purchases or Fed Funds Rate (FFR) as is for September. The FFR, is currently at effective zero percent.
U.S. dollar traders will be paying very close attention to what Federal Reserve Chair Jerome Powell says during his press conference. It is widely believed that the FOMC will say something regarding a time table to taper their $120 billion a month in Treasuries and mortgage-backed securities (MBS).
Economic data, as of late, has been soft. This includes weak labor market numbers and inflation data signaling that consumer prices are near their peak. This could force the Federal Reserve in delaying any decision to taper until November or December.
Daily US Dollar Technical Analysis (USD/CAD)
Looking at the above daily MT4 chart, the U.S. dollar has been inching higher since the USD/CAD Forex market hit a low at 1.2493 seen during the start of the month. However, this currency exchange rate seems to be running out of steak around 1.29.
On the downside, immediate technical support lines up at the 23.6 percent Fibonacci level at 1.2795. The next downside level lines up at 1.2750 before the fifty percent Fibonacci level at 1.27. On the upside, immediate technical resistance lines up at 1.2850. The next layer of technical resistance is at the 20 August high price point at 1.2950.