USD/CAD continues to rebound from the monthly low (1.3099) after forming a bullish outside day (engulfing) candle pattern earlier this week.
USD/CAD could drive higher as the Relative Strength Index (RSI) breaks out of a downward trend.
USD/CAD CONTINUES REBOUND FOLLOWING BULLISH SIGNAL
USD/CAD could be set to test the monthly high (1.3341) as the US Dollar rises on declining risk appetite. The US Dollar could well carry on reflecting an inverse relationship with market confidence as the Fed depends on its emergency tools to cushion the US economy.
The Federal Reserve could continue to keep monetary policy steady as San Francisco Fed President Mary Daly, insists that “policy is in a good place right now,” she added “the Fed is fully committed to using every tool in its tool kit” in a speech at an event hosted by the Wall Street Journal.
Richmond Fed President Thomas Barkin, states that “the Fed will aim to keep rates low until we see moderate overshoots of inflation” suggesting the Fed will continue to endorse a dovish forward guidance as the central bank plans to “achieve inflation that averages 2 percent over time.”
That said, the Fed is in no hurry to use unconventional tools as Cleveland Fed President Loretta Mester, states that the committee could “shift to longer-term Treasuries, as we did during the Great Recession,” and the wait-and-see approach may keep key market trends in place as the central bank prepares a “more explicit outcome-based forward guidance.”
The US Dollar could keep reflecting its reverse risk relationship until the interest rate decision on November 5.