The US dollar returns its previously lost positions, while commodity currencies are falling in price amid an escalation of the US-China trade conflict.
On Tuesday, USD/CAD again tested the local resistance level of 1.3300. Above the support level of 1.3245 (EMA200 on the daily chart), the long-term positive dynamics of USD/CAD prevails and long positions are preferred.
In the event of a breakdown of the local resistance level of 1.3345 (August highs) USD/CAD will go towards the local resistance levels 1.3435, 1.3452 (Fibonacci level 23.6% of downward correction to the pair's growth in the global uptrend since September 2012 and the level of 0.9700), 1.3465, 1.3520, 1.3560 (highs of the year).
In an alternative scenario, the signal for the resumption of short positions will be a breakdown of the short-term support level 1.3233 (ЕМА200 on the 1-hour chart).
The objectives of the decline are local support levels 1.3182, 1.3138.
A breakdown of these levels will trigger a further decline with targets at support levels 1.3020, 1.2880 (EMA200 on the weekly chart).
Today, the focus of traders is the Fed meeting. The acceleration of inflation in the United States may prompt the Fed to report a limited space for lower interest rates in the future.
According to CME Group, investors estimate the likelihood of another rate cut this year (after lowering it on Wednesday) at 58% against 93% a month ago.
If the leaders of the central bank nevertheless signal the next rate cut this year, the US stock market will receive a powerful incentive for further growth, and the dollar may drop sharply.
Otherwise (if the Fed reduces the rate by 0.25%, but does not give a signal about a further reduction in the rate), the dollar, after a short-term reduction, may go on to increase.
The decision on the rate will be published today at 18:00, and the Fed press conference will begin at 18:30 (GMT).
Support Levels: 1.3258, 1.3245, 1.3238, 1.3233, 1.3182, 1.3138, 1.3020, 1.2975, 1.2880
Resistance Levels: 1.3300, 1.3345, 1.3435, 1.3452, 1.3465, 1.3520, 1.3560, 1.3600, 1.3660
Sell Stop 1.3230. Stop-Loss 1.3310. Take-Profit 1.3182, 1.3138, 1.3020, 1.2975, 1.2880
Buy in the market. Stop-Loss 1.3230. Take-Profit 1.3300, 1.3345, 1.3435, 1.3452, 1.3465, 1.3520, 1.3560