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USD/CAD: Dynamic New Highs Seen and More Volatility to Come – 21 September 2022

The USD/CAD is testing long term highs, and traders need to be on guard today as the U.S Federal Reserve’s interest rate announcement is brought forth.

The USD/CAD currency pair is trading near long term highs early this morning, this as its dynamic ride upwards continues to create havoc. Bullish traders who have been riding the trend upwards in the USD/CAD are likely feeling good about the results of their trading the past couple of days, while bearish speculators wagering on reversals may be contemplating frustrations.

Fundamental Rhetoric will Move the USD/CAD later Today

Traders need to be prepared for today’s U.S Federal Reserve pronouncements. An interest rate hike has certainly been factored into the higher move made by the USD/CAD the past couple of days. The question is what the Fed will say today regarding its outlook about potential other hikes on the horizon. If the U.S central bank raises its interest rate by 0.75% today as expected, but says they believe inflation will moderate and they can be less aggressive, this could actually cause the USD/CAD to become bearish.

However, if the Fed today says that inflation remains troubling and that it is ready to act and envisions a potential interest rate by early next year which could exceed 4%, then the USD/CAD may continue to foster upwards momentum. Today’s trading will be fast before and after the U.S central bank’s statement and speculators need to be ready if they are pursuing the price action.


Technical Traders will need to be quick with their USD/CAD Risk Taking Tactics

If the 1.33800 mark is sustained this could ignite another leg higher, but traders need to be ready for very fast conditions technically.Risk management will be essential today, and speculators should use conservative leverage as they pursue the USD/CAD.

Experienced traders know the saying, buy the rumor and sell the fact, but while that often proves correct, it can also prove dangerous. The USD/CAD will likely be given a dose of rocket fuel by the U.S Federal Reserve today. However, the direction the Forex pair moves is very much in question. The U.S central bank would certainly like to maintain a calm global market, but they will have to be careful regarding the wording of their statements. The Fed’s attempt of ‘sitting on the fence’ may fail.

Contrarian traders who believe technically the USD/CAD is overbought are asked to take a look at long term charts and see the currency pair has traded in these higher terrains before. While the USD/CAD may look too high, it traversed above 1.34000 before in December of 2018, without the shadow of coronavirus being a factor.

Traders who want to pursue long positions are offered no guarantees of upwards momentum being sustained, but the trend higher continues to show dynamic ability. Eventually the rocket higher will slow down, but the question is when.

Canadian Dollar Short Term Outlook:

Current Resistance: 1.33850

Current Support: 1.33654

High Target: 1.34000

Low Target: 1.33230

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