NZD/USD Price Forecast: Bears eye 18-months low at 0.5564

The USD/CAD exchange rate has climbed to around 1.4060, marking the third consecutive day of gains. Traders are watching the Bank of Canada's upcoming decision to potentially raise interest rates by 25 basis points. Currently, the pair is within a falling wedge pattern, suggesting a potential bullish breakout if selling pressure eases.

The USD/CAD pair is hovering close to a cluster of Exponential Moving Averages (EMAs), with the 50-day EMA near 1.4066 and the nine-day EMA at 1.4068 acting as immediate resistance levels. The 14-day Relative Strength Index (RSI) at 45 indicates ongoing bearish momentum rather than an oversold condition. If the USD/CAD pair breaks below the falling wedge, it may face downward pressure and potentially slide towards the 1.3950 level, the lower boundary of the falling wedge.

Significant support lies at 1.3481, the lowest level since October 2024. The pair is testing the 50- and nine-day EMAs, both acting as immediate resistance. A break above this confluence could propel the pair towards a near 18-month high of 1.4299, recorded on October 14. ABN Amro analysts anticipate the Federal Reserve to remain passive during this week's meeting, noting "some risk of hawkish dissents" despite the Fed's potential to refrain from rate changes.

They argue that "inflation remains too hot," but suggest that "declining breadth and a cooler labor market provide the Fed with room to wait." The analysts still predict a 25 basis point hike from the Fed in December, followed by an extended hold. Meanwhile, MUFG/BTMU analysts highlight an 80% probability of a BoC rate hike, acknowledging that the outcome remains uncertain and the meeting is still a live event for markets.

Factors driving the Canadian Dollar include interest rates set by the Bank of Canada, the price of oil, the health of the Canadian economy, inflation, and the Trade Balance. The Bank of Canada's primary objective is to maintain inflation at 1-3% by adjusting interest rates accordingly.