USDCAD slowed downward movement ahead of the Fed’s interest rate decision

The USDCAD currency pair is trading in a narrow range on Wednesday as market participants are awaiting the U.S. Federal Reserve's (Fed) decision on interest rates. 

Interest rates are expected to remain unchanged. Fed Chairman Jerome Powell's press conference, where he is to comment on the current year's monetary policy course, will provide important information.

According to LSEG's IRPR supplement, the market expects the Fed to cut rates by 130 basis points this year. That's down from previous forecasts of more than 160 points announced by the markets at the end of 2023. According to the CME FedWatch tool, the indicators show expectations for a rate cut in March fell to 43% from 90% a month earlier.

The U.S. dollar is aiming for its biggest monthly gain since September, but not against the Canadian currency due to the Bank of Canada's policy actions. The Canadian regulator may end its pandemic-era stimulus program sooner than expected due to a lack of liquidity in the financial system. This was confirmed by the central bank's decision to conduct a repo operation worth 5 billion Canadian dollars, which was the first such case in the last four years.

The USDCAD currency pair has broken out of the uptrend of the H4 timeframe.

On the H1 timeframe, the price is forming a downtrend. In terms of wave analysis, the price is in the process of forming the third downward wave. It has already broken through the top of the first wave at 1.3415. The downward movement may intensify in the near term.

Signal:

Short-term prospects for USDCAD suggest selling. 

The target is at the level of 1.3300.

Part of the profit should be taken near the level of 1.3380.

A stop-loss could be placed at the level of 1.3480.

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.