Economists believe that, despite high inflation, the Bank of Canada will pause its interest rate hikes at its meeting on Wednesday, considering the risks of the national economy sliding into a recession.
Meanwhile, against the backdrop of a strengthening U.S. dollar, USD/CAD has been rising since mid-July, and at the beginning of today's European trading session, the pair reached its highest point since March 29, at the level of 1.3671.
Overall, the pair maintains a positive momentum, trading in the zone of both the long-term (above the key support level of 1.2690) and medium-term (above the key support level of 1.3395) bullish markets.
A break above the said levels could signal an increase in long positions on USD/CAD. The nearest growth targets are located at local resistance levels 1.3700, 1.3800, and 1.3860.
In an alternative scenario, USD/CAD could resume its decline. The first signal for selling would be a break below today's low at 1.3626 and the support level of 1.3624 (200 EMA on the 15-minute chart), with confirmation coming from breaking through the important short-term support level of 1.3582 (200 EMA on the 1-hour chart).
The targets of the downward correction are the local support level of 1.3500 and 1.3474 (200 EMA on the 4-hour chart).
Further decline and a break below key support levels at 1.3395 (200 EMA on the daily chart) and 1.3380 (50 EMA on the weekly chart) will bring USD/CAD into the zone of the medium-term bearish market, and breaking through the support levels at 1.3170 and 1.3115 (200 EMA on the weekly chart) will place it in the zone of the long-term bearish market, making short positions preferable.
Support levels: 1.3626, 1.3624, 1.3600, 1.3582, 1.3500, 1.3474, 1.3450, 1.3395, 1.3380, 1.3320, 1.3300, 1.3200, 1.3170, 1.3115
Resistance levels: 1.3671, 1.3700, 1.3810, 1.3860, 1.3900, 1.3970, 1.4000
