The current USD/CAD forecast is bullish amid growing apprehensions about persistently elevated interest rates, which have driven investors to find safety in the dollar.

Federal Reserve Bank of Minneapolis President Neel Kashkari and several other Federal Reserve officials warned the markets about the potential for additional interest rate hikes. On Wednesday, Kashkari emphasised that substantial evidence indicated the economy’s continued strength. Consequently, this strength suggested that further tightening measures might be on the horizon.

Furthermore, Fed Chair Jerome Powell will deliver a speech on Thursday. This event could provide additional insights into the direction of US monetary policy. Additionally, it might offer markets further guidance on what to expect regarding interest rate adjustments.

Concurrently, traders closely monitored efforts by lawmakers to prevent a US government shutdown.

Meanwhile, the Canadian dollar experienced a slight increase against its US counterpart on Wednesday amid a surge in oil prices. This recovery came after the currency had touched its lowest level in nearly two weeks.

Erik Bregar, Director of FX & Precious Metals Risk Management at Silver Gold Bull, noted that the Canadian dollar had fluctuated due to rising oil prices and falling stock prices. Furthermore, he observed that the past week had been challenging, primarily due to the sharp increase in US bond yields, prompting a broader shift in the FX market towards the US dollar.

USD/CAD key events today

Investors are awaiting several major releases from the US, including the following:

• US GDP.
• Initial jobless claims.
• Pending home sales report.
• Fed Chair Powell speech.

USD/CAD technical forecast: Price tests crucial 30-SMA support

(Click on image to enlarge)

USD/CAD 4-hour chart

On the technical side, the USD/CAD pair has pulled back and is retesting the 30-SMA support. At the same time, the RSI has fallen to the pivotal 50 mark and seems ready to bounce higher. The bias for the pair is bullish as the price trades slightly above the 30-SMA. 

Moreover, the price recently made a higher high above the 1.3501 key level. If the 30-SMA holds firm as support, the price will soon bounce higher with the next target at the 1.3550 resistance level. On the other hand, a break below the SMA would indicate a reversal to the downside.

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