The USD/CAD pair trades largely flat near 1.3685 during the late Asian session on Tuesday, as the Loonie pair consolidates ahead of the release of the Federal Open Market Committee (FOMC) Minutes from the December meeting later in the New York session.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, hovers around the 98.00 mark. Despite the steady tone, the index remains close to its 12-week low near 97.75, highlighting ongoing pressure on the US Dollar.
Market participants are closely watching the upcoming FOMC Minutes for fresh guidance on the Fed’s policy outlook. At its latest meeting, the Federal Reserve delivered its third consecutive 25-basis-point rate cut, lowering the benchmark rate to the 3.50%–3.75% range. Policymakers also signaled that only one additional rate cut is expected in 2026, reinforcing a more cautious easing path.
On the other side of the pair, the Canadian Dollar shows mixed performance against its major peers in a week characterized by thin trading volumes. Nevertheless, the broader outlook for the CAD has improved, as the Bank of Canada is widely expected to keep interest rates unchanged in the near term, providing relative support to the currency.
USD/CAD technical analysis
From a technical perspective, USD/CAD continues to trade under pressure near the 1.3685 area. The 20-day Exponential Moving Average (EMA) is sloping lower and remains above spot prices, maintaining a bearish bias as upside attempts continue to stall below this dynamic resistance. The 20-day EMA, currently near 1.3777, caps the upside.
Momentum indicators reinforce the negative outlook. The 14-day Relative Strength Index (RSI) stands at 30.6, hovering near oversold territory and reflecting strong bearish momentum.
As long as the pair holds below the declining 20-day EMA, the short-term tone remains fragile. A decisive break below Friday’s low at 1.3640 could open the door for a deeper pullback toward the 1.3543 support level.
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