- US dollar's recovery from 1.3495 finds resistance at 1.3685.
- The pair remains moderately bid with all eyes on the Fed.
- USD/CAD: needs to breach 1.3650 to confirm its upward trend – Scotiabank.
The US dollar is pulling lower on Monday’s US trading session, giving away previous gains after having peaked at 1.3685. On the daily chart, however, the pair remains moderately positive, on track to close a three-day rally from 1.3495 lows last week.
The US dollar appreciates ahead of Fed’s meeting
The Federal Reserve is attracting investors’ attention this week. The US central bank is widely expected to deliver the fourth consecutive jumbo hike next Wednesday, which is keeping the greenback moderately bid across the board at the start of the week.
US macroeconomic data, however, have not been dollar supportive on Monday. The Chicago Purchasing Managers’ Index deteriorated for the second consecutive month -to 45.2 in October from 45.7 in September- and the Dallas fed Manufacturing Index confirmed the lackluster perspectives of the sector, declining to a -19.4 reading in October from -17.2 in September.
On the other hand, the Canadian dollar has failed to capitalize on the recent USD weakness, weighed by lower oil prices. The US benchmark WTI is dropping nearly 2% on the day, amid concerns about the weak Chinese manufacturing data and its potential impact on demand.
USD/CAD: Confirmation above 1.3650 will increase upward momentum – Scotiabank
Currency analysts at Scotiabank point out at the 1.3650 level key to confirm the pairs’ neat-term trend: “USD/CAD pressured key support at 1.3505 on Thursday, but failing to achieve a sustained break under the figure leaves the market prone to a rebound (…) “Gains through 1.3650 are needed for the USD recovery to extend intraday. A high close today for the USD may add to short-term upward momentum.”
Technical levels to watch
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