On Wednesday, the USD/CAD forecast leaned towards optimism, fueled by a slight uptick in the dollar. Traders eagerly anticipated the Federal Reserve policy meeting’s conclusion, where clues about the potential timing of interest rate cuts might unfold. 

Market expectations point to rates remaining unchanged. Meanwhile, investors are keen to understand the central bank’s economic outlook. Moreover, there are questions about whether Fed Chair Jerome Powell opposes the idea of interest rate cuts in the first half of 2024.

Recent indicators suggested a soft landing. However, overnight data revealed an unexpected increase in consumer prices for November. Still, traders are factoring in a quarter-point rate cut in May.

Meanwhile, the Canadian dollar has weakened against the US dollar since yesterday due to falling oil prices. Moreover, there is speculation about the Bank of Canada potentially being among the first major central banks to cut rates in the coming months. Notably, the Bank of Canada could be one of the first central banks to ease in 2024.

Money markets anticipate the Bank of Canada lowering its benchmark rate, currently at a 22-year high of 5%, as early as April. However, analysts caution that the recent relaxation of financial conditions might hinder the central bank’s ability to control inflation. Additionally, it could delay a shift to rate cuts if it sparks increased activity in the housing market.

USD/CAD key events today

• US core PPI m/m
• US PPI m/m
• Fed policy meeting

USD/CAD technical forecast: Bulls gear up for another shot at breaking 1.3600

USD/CAD 4-hour chart

USD/CAD bulls are attempting to break above the 1.3600 key resistance level on the charts. This comes after the price broke above its resistance trendline, signaling weakness in the bearish trend. 

Moreover, the price trades above the 30-SMA, showing that bulls have strengthened. At the same time, the RSI is above 50, in bullish territory. Therefore, the price will likely surpass 1.3600 to retest the 1.3700 key resistance level. However, there is also a chance that the price will retest the 1.3500 key levels before the trend changes to bullish.

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