USDCAD is testing a significant support level ahead of Wednesday’s federal funds rate and press conference.
We know that the Federal Open Market Committee (FOMC) rate decision and subsequent press conference trigger volatility for currencies.
So USDCAD testing its July 2021 trend line feels significant ahead of such a market-moving event.
I mentioned this trend line as one to watch on January 13th, and the 1.3300 area remains key support for USDCAD this week.
The trend line support is intact as long as USDCAD trades above 1.3300 on a daily closing basis.
However, bulls need to secure a daily close back above 1.3370 to open up higher levels like 1.3560.
Alternatively, a daily close below 1.3300 would signal weakness. But remember from my January 13th article that 1.3230 is also significant.
So any breakdown from USDCAD also has to deal with 1.3230 support.
A daily close below 1.3230 will expose the monthly pivot at 1.2950.
Notice how the 1.2950 level has been a monthly pivot for USDCAD since January 2020.
Also noteworthy is that 1.2950 is the 50% retracement of the May 2021 to October 2022 rally.
In summary, a daily close below 1.3300 and 1.3230 would open up 1.2950 support, while a daily close above 1.3370 would signal strength toward 1.3560.
But remember that this Wednesday’s FOMC at 2 pm EST will introduce significant volatility to the forex market.
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