USD/CAD hits fresh 18-month highs above 1.3500
The USD/CAD pair jumped more than 50 pips after the FOMC meeting and reached at 1.3507, the strongest level since June 2017. Then pulled back modestly and it was hovering slightly below 1.3500, consolidating daily gains.
The move higher was triggered by a rally of the US dollar across the board. The FOMC mentioned that “some” further gradual increases in the target range will be consistent with the sustained expansion of economic activity. The US dollar remains strong even though the updated economic projections reduced the number of expected rate hikes in 2019 to two from three. During the press conference, Powell said that that the policy does not currently need to be restrictive.
Overall, the tone was not as dovish as expected and pushed the US dollar higher, particularly against commodity currencies. It even gained ground versus EM currencies.
Levels to watch
The USD/CAD recovered the positive momentum with today’s rally but still needs to make a clear break of the 1.3500 area to clear the way to more gains.
To the upside, the area around 1.3500 continues to be a critical resistance followed by 1.3545 (June 2017 high) and 1.3575. Support levels might now lie at 1.3445, followed by 1.3415 (Dec 19 low) and 1.3390 (Dec 18 low).