The US dollar against the Canadian dollar is under pressure below 1.28, the market is concerned about the Fed’s resolution

On Wednesday (September 22), the US dollar to Canadian dollar maintained the selling tone in the first half of the European session, although it rebounded a few points from the daily low. The currency pair is currently below the 1.2800 mark, a drop of more than 0.2% on the day. The focus of market attention is still the results of the two-day Federal Open Market Committee (FOMC) policy meeting.


A series of factors failed to help the USD/CAD to continue the rebound from the 1.2745-40 area the day before, but instead triggered a new round of selling on Wednesday. The risk appetite of the market put pressure on the safe-haven U.S. dollar. In addition, the bullish oil price supported the Canadian dollar linked to commodities and put some pressure on the exchange rate.

The generally optimistic tone of the US stock market has clearly boosted global risk sentiment and weakened the demand for U.S. dollars, which are regarded as safe-haven assets.

At the same time, due to signs of tight supply and improving demand, crude oil prices rose on the basis of a small overnight increase, rising by about 1.5% on Wednesday. According to data released by the American Petroleum Institute (API) on Tuesday, US crude oil inventories fell by 6.1 million barrels last week. Traders are now looking forward to Wednesday’s official data to confirm this decline.

However, the increase in crude oil prices is good for the Canadian dollar and has led to a decline in the exchange rate of the US dollar against the Canadian dollar. But the downside seems limited, as investors may not bet heavily before the key results of the two-day Federal Reserve monetary policy meeting are announced. The Fed will announce its interest rate decision later in the U.S. session.

Investors will look for clues about the possible timing of the Fed's reduction of bond purchases. In addition, the latest economic forecasts and so-called dot plots will have a key impact on the dollar in the short term. This, coupled with the dynamics of oil prices, should help determine the next phase of the USD/Canadian exchange rate.

The upper resistance pays attention to 1.2849, 1.2896, 1.2949, and the lower support pays attention to 1.2728, 1.2665 and 1.2591.

(Daily chart of USD/Canadian dollar)

At 20:23 GMT+8, the US dollar was quoted at 1.2797 against the Canadian dollar.