• The dollar made slight gains following the release of the FOMC minutes.

• The majority of policymakers anticipate further tightening of US monetary policy.

• The Canadian dollar declined to its lowest level against the US dollar in nearly three weeks.

Today’s USD/CAD forecast is bullish. On Thursday, the dollar made slight gains following the release of the minutes from the US Federal Reserve’s recent policy meeting. These minutes strengthened the belief in an upcoming interest rate hike this month. 

Notably, the minutes revealed that most policymakers anticipate further tightening of US monetary policy. This is despite their decision to maintain interest rates at the previous meeting. As a result, the dollar experienced a slight increase in value, accompanied by higher Treasury yields. 

In contrast, stocks declined as market expectations grew that the Federal Reserve would resume its rate-hike campaign this month. Furthermore, it might maintain higher rates for an extended period to combat inflation. 

The CME FedWatch tool indicates that markets are currently pricing in an 89% probability of a 25 basis point rate increase in July.

On Wednesday, the Canadian dollar declined to its lowest level against the US dollar in nearly three weeks. This was caused by a shift towards more cautious investor sentiment, which prompted the purchase of the US dollar based on technical factors. 

George Davis, the chief technical strategist at RBC Capital Markets, stated that the weakened US equity markets created a risk-off environment. Consequently, it led to broader gains for the US dollar. 

Finally, the price of oil, a significant export for Canada, narrowed the price difference with the global benchmark Brent. This occurred as a response to the supply cuts announced by Saudi Arabia and Russia on Monday.

USD/CAD Key Events Today

Several important economic releases from the US today might cause a lot of volatility for USD/CAD. Investors will get details on employment and business activity in the services and non-manufacturing sectors.

USD/CAD Technical Forecast: Bulls Set Sights On 1.3350.

USD/CAD 4-hour chart

On the charts, USD/CAD has finally broken above the 1.3275 resistance level after a long period of consolidation. Consequently, the price has risen farther above the 30-SMA, strengthening the bullish bias. 

At the same time, the RSI has gotten closer to the overbought region, indicating strong bullish momentum. Now that the price is above 1.3275, nothing stops it from reaching 1.3350 resistance.

https://www.forexcrunch.com/usd-cad-forecast-fed-minutes-boost-rate-hike-expectations/