USD/CAD Soars Post Fed Rate Decision

Fundamental Analysis

* First Cut: USD/CAD have surged during the Asian session following the Fed’s interest rate decision, which triggered significant market volatility. The Federal Open Market Committee (FOMC) reduced the federal funds rate to a range of 4.75% to 5%, marking the Fed’s first rate cut in over four years. In a press conference after the policy meeting, Fed Chair Jerome Powell stated, “This decision reflects our growing confidence that with a proper adjustment of our policy, we can sustain labor market strength while maintaining moderate growth and bringing inflation down to 2%.”. Additionally, Fed officials updated their quarterly economic forecasts, raising the projected unemployment rate for the end of 2024 to 4.4% from June’s estimate of 4%. The long-run federal funds rate projection was also increased to 2.9% from 2.8%. The U.S dollar initially dipped after the announcement but recovered once Powell concluded his remarks.

Technical Analysis

* Technical Breakout: USDCAD was traded higher following prior breakout above the previous resistance level 1.36150. MACD which illustrate bullish momentum signal with the formation of golden cross suggest the pair to further extend its gains.

*Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.37850. Conversely, a potential reversal is also to be expected and the price could head back towards the level 1.34600 after it breach back below the level 1.36150.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, investors will keep an eye on the US weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales, which are due later in the day.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Canada data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

Grab the trading opportunity and dive into the action risk-free with a free demo account. It is the perfect way to hone your skills and explore the exciting world of trading!

Open Your Free Demo Account And Start Trading Risk-Free

Join Now

Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.