USD/CAD Before The FOMC Interest Rate Statement

After the big drop from 1.37931 to 1.2480 USD/CAD stopped in the strong support zone around 1.2450 – 1.2500.

During the past ten days (from 13th July to 25 July) the pair formed a trend channel which can be observed best on the H4 and H1 time frames. Its height at its base is around 100 pips. I would call it an ending diagonal, but I think it is less important how we’d call it than figuring out what it is a signal for.

If we take into account the support zone the pair is developing at and the ending diagonal it is developing within, as well as the impending announcement of the interest rate by FOMC, I think that we could expect a corrective rally with first target around 1.2620 – 1.2630.

In the alternate scenario there will be a drop to 1.2430 – 1.2400.

And since for the moment there is no expectation that interest rate will be changed from 1.25 I think it is a good idea to pay attention to the technical analysis of the USD.