Traders who enjoy searing price action and speculative spikes may want to research USD/CAD today, but conservative market participants may want to sit quietly and watch.

USD/CAD is moving with rapid price action in early trading this morning as financial institutions brace for the Bank of Canada’s expected interest rate hike later in the day. As of this writing, the USD/CAD currency pair is near 1.36700, but conditions are fast moving and speculators should expect price changes. Short-term traders with limited funds should practice risk-taking tactics with extreme caution.

The Bank of Canada is expected to raise its key rate by 0.75% to 3.25%

Financial institutions are now anticipating an interest rate hike that will match the decision taken by the US Federal Reserve in July. The BoC’s move is widely expected to try to keep pace with the US and ensure that Canada also keeps its central bank’s outlook in line with its neighbor below. USD/CAD continues to rally against important resistances. In July, USD/CAD traded above the 1.32000 mark, and the 1st September, the Forex pair again hit the 1.32000 mark.

  • Once again at the start of trading today, the 7e September USD/CAD hit 1.32000, but then reversed lower.
  • Trading conditions will remain fast and volatile ahead and following the Bank of Canada’s interest rate statement today.

Speculative traders should be prepared for momentum price action in this upper range

Traders should watch the near term ratio of 1.31700 as support. If this level continues to prove sustainable, it can serve as a launchpad for potential long positions that seek out quick moves higher and attempt to take advantage of USD/CAD volatility today. However, traders need all their risk management to work and it may be wise to use entry price orders when engaging USD/CAD so that fills meet expectations.

Bullish speculators may want to be conservative today; USD/CAD is trading near important long-term resistance as it sincerely trades in a higher price range that has been unchallenged for a sustained period since October 2020. The incremental upward trend within USD/CAD may not be ready to reverse yet and the long-term outlook remains optimistic.

However, short-term conditions are bound to be very difficult for speculators today and they should be prepared to enter and exit trades quickly.. In other words, in the short term, USD/CAD is likely to produce strong price action, which could prove difficult. Traders are advised to use take profit orders that are closer to the market price than their stop losses, but if practiced very conservative leverage should be used.

Short-term outlook for the Canadian dollar:

Current resistance: 1.31880

Current Support: 1.31670

High Target: 1.32125

Low target: 1.31430

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