From a technical analysis perspective, USD/CAD finds notable support near the 1.3550 level, with additional downside protection extending toward 1.3450. However, the current session could see heightened volatility as key central bank developments unfold. The US dollar showed significant volatility early in Wednesday’s trading session, coinciding with interest rate decisions from both the US Federal Reserve and the Bank of Canada. The Canadian dollar remained relatively subdued, with limited reaction during the initial phase of trading. As the session progresses, market attention is firmly focused on the upcoming press conference by Jerome Powell.
At this stage, the United States is not expected to adjust interest rates in the near term, leaving markets grappling with uncertainty over whether policymakers may eventually signal tolerance for a weaker dollar. While the greenback has faced notable pressure in recent weeks, USD/CAD continues to be driven by multiple overlapping macroeconomic factors. Although this currency pair is not as directly tied to oil prices as some other CAD crosses, movements in crude still influence the Canadian dollar indirectly. From a technical standpoint, the 1.3550–1.3450 zone remains a key support area for USD/CAD, and price action around this region will be crucial. The next directional move is likely to depend on whether Powell’s remarks strike a hawkish or dovish tone.
On the upside, a rebound in USD/CAD could see the pair retest the 1.3750 level, an area that has repeatedly acted as an important technical barrier. Traders will be watching closely to determine whether this region offers a renewed selling opportunity. A sustained break above this level, however, could open the door to a much broader bullish move. Zooming out, USD/CAD appears to be testing the lower boundary of the broad trading range that has defined price action over the past few years.
Even a decline toward 1.3200, last seen in mid-2022, would still keep the pair within that longer-term range. While conditions suggest the pair may be somewhat oversold, the ultimate direction will depend heavily on the market’s reaction to the FOMC press conference. By the end of the session, clearer directional signals may emerge, with technical support likely to come into focus.