Struggles to gain momentum beyond 1.3200, eyes on FOMC

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• USD/CAD struggles to gain momentum beyond the 1.3200 area on Wednesday.
• The pair holds below the 50- and 100-hour EMAs with a downward slope.
• The immediate resistance level is seen at 1.3200; the initial support level is located at 1.3145.

The USD/CAD pair attracts some follow-through buying but struggles to gain momentum beyond the 1.3200 area during the Asian session on Wednesday. Traders await the closely-watched Federal Open Market Committee (FOMC) meeting scheduled later in the North American session. The major pair is trading at 1.3185, gaining 0.09% for the day.

The Conference Board survey revealed that US consumer confidence reached a two-year high in July. The figure rose to 117.0 from 110.1 (revised from 109.7) in June, the highest reading since July 2021. The data bolstered optimism that the economy could avoid a recession this year. This, in turn, could support the greenback and cap the upside in the commodity-linked Loonie.

According to the four-hour chart, the path of least resistance for the USD/CAD is to the downside as the major pair holds below the 50- and 100-hour Exponential Moving Averages (EMAs) with a downward slope. Meanwhile, the Relative Strength Index (RSI) stands slightly above 50, highlighting the non-directional movement of the pair.

That said, the immediate resistance level is seen at 1.3200, representing the confluence of a psychological round mark and the 100-hour EMA. Any meaningful follow-through buying above the latter will see a rally to the next barrier at 1.3230 (High of July 17). Following that, the June 15 swing high of 1.3355 will be in focus. The 1.3390–1.3400 zone appears to be a tough nut to crack for USD/CAD.

Looking at the downside, any extended weakness below 1.3145 (Low of July 25) will challenge the next downside filter at 1.3120 (Low of July 20) and 1.3090 (Low of July 14).

USD/CAD four-hour chart