• USD/CAD climbs to near 1.3840 as the Canadian Dollar underperforms.
• The BoC is expected to cut interest rates again in October.
• Investors await Fed Powell’s speech for fresh cues on the monetary policy outlook.

The USD/CAD pair jumps to near 1.3840 during the European trading session on Tuesday. The Loonie pair advances even as the US Dollar (USD) trades cautiously, suggesting weakness in the Canadian Dollar (CAD).

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 97.30.

The Canadian Dollar faces selling pressure amid firm expectations that the Bank of Canada (BoC) will cut interest rates again in the policy meeting October. The BoC reduced interest rates by 25 basis points (bps) to 2.5% in the last week’s monetary policy announcement amid weakness in the labor market.

Meanwhile, investors await the speech from Federal Reserve (Fed) Chair Jerome Powell, which is scheduled at 16:35 GMT. Investors will pay close attention to Fed Powell’s speech to get cues on the monetary policy outlook.

In the North American session, investors will also focus on the flash United States (US) S&P Global PMI data for September.

USD/CAD extends its week-long recovery move to near 1.3840 on Tuesday. However, the overall trend of the pair remains uncertain as the it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.3865.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among investors.

Going forward, a recovery move by the pair above the August 22 high of 1.3925 would open the door towards the May 15 high of 1.4000, followed by the April 9 low of 1.4075.

On the flip side, the asset could slide towards the round level of 1.3600 and June 16 low of 1.3540 if it breaks below the August 7 low of 1.3722.

USD/CAD daily chart
 

(Click on image to enlarge)

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