The USD/CAD pair is trading almost flat around 1.3685 during the late Asian trading session on Tuesday. The Canadian pair is consolidating ahead of the release of the Federal Open Market Committee (FOMC) minutes for its December meeting late in the New York session.
At the time of writing, the US Dollar Index (DXY), which measures the value of the dollar against six major currencies, is trading flat around the 98.00 level. However, the DXY is approaching a 12-week low of 97.75.
Investors will be watching the minutes of the Federal Open Market Committee meeting closely for new signals on the outlook for monetary policy. At the policy meeting, the Fed cut interest rates for the third time in a row by 25 basis points, pushing them down to 3.50%-3.75%. The Fed also indicated that there will be only one rate cut in 2026.
Meanwhile, the Canadian Dollar (CAD) showed mixed performance against its major counterparts in a week of weak trading volume. However, the outlook for the currency has improved as the Bank of Canada (BoC) is unlikely to cut interest rates in the near term.
Technical analysis of the USD/CAD pair
The USD/CAD pair is trading flat near 1.3685 on Tuesday. The 20-day Exponential Moving Average (EMA) is trending down and standing above the spot price, maintaining the broader bias to the downside with the retracement stalling below the average. The uptrend is capped by the 20-day EMA at 1.3777.
The 14-day Relative Strength Index (RSI) at 30.6, near the oversold zone, reflects heavy downside momentum.
With the price holding below the bearish average, the short-term tone remains compressed. The price may extend the decline towards the 1.3543 level if it breaches the lowest level recorded on Friday at 1.3640.
(Technical analysis of this story was written with the help of an artificial intelligence tool)
