USD/CAD Price Forecast: Falls to near 1.4250 near nine-day EMA support

• USD/CAD may find initial barrier at the 18-month high of 1.4298.
• The 14-day Relative Strength Index at 68.07, signaling upside potential, is stretching near recent highs.
• The primary support lies at the nine-day EMA of 1.4236.

USD/CAD depreciates after two days of gains, trading around 1.4260 during European hours on Tuesday. The technical analysis of the daily chart indicates that the price is remaining within the ascending channel pattern, suggesting a persistent bullish bias.

The USD/CAD pair is extending its advance while holding above both the nine- and 50-period Exponential Moving Averages (EMAs), which reinforces a bullish near-term bias. The 14-day Relative Strength Index (RSI) at 68.07 hovers just below the overbought threshold, hinting that upside momentum remains strong but increasingly stretched as price presses against recent highs.

The USD/CAD pair may rebound toward the 18-month high of 1.4298, recorded on October 9. A successful break above this level would support the pair to test the top trendline of the ascending channel around 1.4390, followed by the psychological level of 1.4300.

On the downside, the primary support lies at the nine-day EMA of 1.4236. A break below the short-term price average would weaken the bullish bias and put downward pressure on the USD/CAD pair to navigate the region around the bottom trendline of the ascending channel around 1.4110, followed by the 50-day EMA of 1.4062.

Hammack leans hawkish as Fed rhetoric underscores need for tighter policy

Fed’s Hammack delivers a notably more hawkish message, with an FXS Speechtracker score of 8.4/10 compared to the established baseline of 7.5/10, emphasizing that interest rates need to be higher and that more tightness is needed in the economy. The focus on widespread inflation pressures, strong demand beyond energy, and the risk of an inflationary mindset becoming ingrained, alongside a preference for frequent, smaller policy tweaks, signals a restrictive bias even as financial conditions are described as neutral and trend inflation is seen stuck in the mid-to-high 2% range for some time. Hammack’s insistence that inflation expectations should not be assumed anchored, and that Fed officials must clarify the reaction function, reinforces a message of readiness to act relatively quickly to keep policy tight until the 2% target is credibly in sight.

The FXS Fed Sentiment Index rose by 0.59 points to 138.92, keeping Fed rhetoric firmly in hawkish territory well above the neutral 100 threshold and aligning with the elevated FXS Speechtracker score. This combination of a stronger hawkish tone and a high index level suggests sustained support for a tighter policy path, which is typically Dollar-positive and a headwind for risk-sensitive currencies.

(The technical analysis of this story was written with the help of an AI tool. Know more.)