• USD/CAD is consistently defending the 1.3540 support, however, a volatile action is anticipated ahead of Fed policy.
• As a 25 bp rate hike by the Fed is already expected, uncertainty about Fed rate guidance is fueling anxiety among investors.
• The US Dollar has witnessed selling interest from 61.8% and 50% Fibo retracements at 1.3648 and 1.3584 respectively.

The USD/CAD pair has been oscillating in a narrow range around 1.3550 from the past two trading sessions. The Loonie asset is continuously defending its immediate support of 1.3540 amid overall strength in the US Dollar Index (DXY).

A power-pack action is anticipated from the asset as investors are awaiting Federal Reserve’s (Fed) monetary policy. A consecutive 25 basis point (bp) interest rate hike is widely anticipated, however, uncertainty over rate guidance is infusing anxiety among market participants.

The USD Index is facing barricades around 102.20 for the past two weeks. Meanwhile, S&P500 futures have trimmed some of their losses, showing some improvement in the risk appetite of the market participants.

USD/CAD is facing selling pressure from Fibonacci retracement like a textbook picture. On a two-hour scale, the Fibonacci retracement tool is placed from March 10 high at 1.3862 to April 14 low at 1.3301. The US Dollar has witnessed selling interest from 61.8% and 50% Fibo retracements at 1.3648 and 1.3584 respectively.

Also, the 20-period Exponential Moving Average (EMA) at 1.3560 is acting as a barricade for the US Dollar.

A slippage into the 20.00-40.00 tunnel by the Relative Strength Index (RSI) (14) will result in the activation of bearish momentum.

Going forward, a decisive break below the intraday low at 1.3533 will expose the asset to psychological support at 1.3500 followed by a 23.6% Fibo retracement at 1.3438.

On the flip side, a recovery move above the 61.8% Fibo retracement at 1.3650 will trigger a reversal and will drive the major toward the round-level resistance at 1.3700. A break above the same will expose the asset to March 22 high at 1.3745.

USD/CAD two-hour chart