Upbeat 4Q Euro-Zone GDP Report To Curb EUR/USD Weakness

DailyFX Table

USD/CAD may face range-bound conditions going into the end of the month as market attention turns to the Federal Open Market Committee (FOMC) interest rate decision on January 31.

The fresh remarks from FOMC may sway the near-term outlook for USD/CAD as the committee appears to be on track to further normalize monetary policy over the coming months, and Fed officials may prepare U.S. households and businesses for a March rate-hike as most participants support ‘a gradual approach to raising the target range.’ In turn, a hawkish policy statement may spur a bullish reaction in dollar-loonie, with the pair at risk of staging a near-term rebound especially as the Bank of Canada (BoC) implements a dovish-rate hike at its first meeting for 2018.

Keep in mind, the broader outlook for USD/CAD remains tilted to the downside as the pair snaps the range from earlier this month, while the Relative Strength Index (RSI) continues to track the bearish formation carried over from November, but thenear-term outlook remains clouded with mixed signals as the Relative Strength Index (RSI) persistently holds above 30 even as the exchange rate sits near the monthly-low (1.2282).

USD/CAD Daily Chart

USD/CAD Daily Chart

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Recent price action highlights the risk for a more meaningful rebound in USD/CAD as the pair snaps the string of lower-lows from earlier this month following the series of failed attempts to test the 1.2210 (50% expansion) to 1.2250 (50% retracement).

Keeping a close eye on the RSI as it hold above oversold territory and appears to be deviating with price; first topside region of interest comes in around 1.2440 (23.6% expansion) to 1.2510 (78.6% retracement) followed by the former-support zone around 1.2620 (50% retracement).