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The US and Canadian interest rate agenda meeting is approaching. Is it a chance for the Canadian dollar to win or a counterattack?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: The US and Canadian interest rate agenda meeting is approaching, is it a chance for the Canadian dollar to win or a counterattack on the US dollar?" Hope it will be helpful to you! The original content is as follows:
On Wednesday (September 17), the US dollar index rebounded slightly by 0.14%, trading at 96.76, currently near the 2025 full-year low (about 96.30). The US dollar index fell 0.71% last trading day, and it is suspected that it has xm-forex.completed the pricing of the Federal Reserve's interest rate cut by 2-3 times this year. The Federal Open Market xm-forex.committee (FOMC) meeting of the Federal Reserve will be held at 2 a.m. Beijing time on September 18, and market doubts about "whether the expectation of interest rate cuts have been fully priced" continue to heat up. As the market expects the Federal Reserve and the Bank of Canada (BOC) to implement a 25 basis point interest rate cut, the dollar-Canadian exchange rate continues to stabilize above the 1.37 mark.
The current situation of the US dollar index
The sharp drop on Tuesday made the US dollar index currently priced at the Federal Reserve's 25 basis points rate cuts and two rate cuts this year, but speculations on a 50 basis point rate cut have not disappeared.
Political uncertainty from the Federal Reserve meeting continues to suppress the US dollar side. Although the news side is generally negative, in the context of "expectations have been partially digested", the market structure and key technical positions still dominate the short-term trend.
If the Fed releases dovish signals that exceed market expectations (especially a clear statement on weak employment market), the US dollar index may face further downward pressure, otherwise it may rebound based on the box.
Bank of Canada is concerned about domestic growth, employment and tariff prospects
Tariff issues remain core concerns around the global central banks, including the Bank of Canada, and policy makers are prudently evaluating policy options. Recent data released further reinforces the tone of caution: Canada's GDP revised data shows thatThe growth rate in the first quarter fell to 1.6%, the growth rate in the second quarter was further lowered from 2.2% to 2.0%, and the unemployment rate climbed to 7%, the same as the stage high since 2021. The inflation data showed a differentiation trend: the monthly consumer price index (CPI) fell by 0.1% month-on-month, while the core median CPI and the core pruning mean CPI continued to hover around 3.1%. This weak data further consolidated the market's expectations for the Bank of Canada to cut interest rates by 25 basis points, and its policy interest rate will be lowered from 2.75% to 2.50%
The pair currently maintains stable fluctuations above the 1.37 support level.
Technical analysis:
From the daily chart, the US dollar index has clearly fallen below the head and shoulders top pattern, and at the same time it falls below the box. The US dollar index is rebounding after falling below the box. It is currently supporting at 96.37, which is the bottom point on July 1, and the low point for the year. If it falls below, then look at the 95.00 mark. The overall head and shoulders top pattern measurement is 94.44.
But it should be clarified that unless there is a clear breaking trend for the box, the current downward trend of the US dollar index may still be restricted by the box, and there is even a possibility of reversal based on the box. If the price starts to rebound from the box support level and successively breaks through the 97.50 and 98.50 resistance levels, the market's bulls and bears will turn bullish.
The technical structure of the monthly chart of the US dollar index is still worthy of attention. The core logic xm-forex.comes from the following key morphological characteristics: Since 2008, the US dollar index has always been operating in a market-recognized rising parallel channel at the monthly level. The current price is testing the lower track of this channel that lasts for 17 years, and the trend background is highly similar to the historical rebound nodes, and both have bullish engulfing K-line patterns.
The US dollar against the Canadian dollar is currently in a neutral oscillating range, and has been consolidating below the 1.39 resistance level since August. The market is suspected to be building a head and shoulders top pattern, but the price needs to clearly fall below 1.3720 to confirm that the pattern is established - once it breaks, it will open downward space, and the target is to the 2025 lows of 1.3650 and 1.3540 range
Up>Upward dimension: If the currency pair can stand firm above the 1.3760 support level, it may start a rebound. Test the 1.3820, 1.3880 and 1.3920 resistance levels in turn
The above content is about "[XM Foreign Exchange Market Review]: The US and Canadian interest rate agenda meeting is approaching, is it a chance to win a respite or a counterattack on the US dollar?", which was carefully xm-forex.compiled and edited by the XM Foreign Exchange editor, I hope it will be helpful to your trading! Thanks for the support!
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