USD/CAD is steady at around 1.2830s in choppy trading ahead of the Fed

• The Loonie is losing minimal ground vs. the greenback, 0.01% ahead of the Fed meeting.
• The USD/CAD is trading in a narrow range as traders assess the pace of tightening that the US central bank is going to take.
• The Canadian trade balance showed a surplus, while in the US, the deficit widened.
• USD/CAD Price Forecast: Tilted to the upside, but macroeconomic news, can shift the bias.

The USD/CAD is subdued in a choppy trading session during the North American session, as market players remain on the sidelines waiting for the Federal Reserve monetary policy decision. At the time of writing, the USD/CAD is trading at 1.2832.

Choppy trading ahead of the Fed keeps the USD/CAD within familiar levels

The market sentiment is downbeat, as global equities are trading with losses. China’s Covid-19 crisis worsened as Beijing announced the close of more than 40 metro stations. Also, Beijing reported sporadic community coronavirus infections, while Shanghai saw an improvement in the epidemic situation. Meanwhile, Ukraine-Russo jitters have remained in the backseat since the beginning of the week; however, the EU Commission President von der Leyen stated that there would be a complete import ban on all Russian oil, particularly pipeline, crude and refined.

In the meantime, the greenback is under pressure ahead of the Fed but still near the 103.500 area, down 0.04%, while the US 10-year Treasury yield tops at 2.999%, gains three basis points.

Earlier in the session, some US and Canadian economic data crossed the wires. On the US front, April’s ADP Employment Change showed that the economy added 247K new jobs, lower than the 395K estimated, while the Balance of Trade for March reported a wider deficit, from $-89 billion to $-109 billion. Regarding the Non-Manufacturing PMIs, the so-called services for April decreased, while the S&P Global Composite Final report decelerated to 56 from 57.7.

On the Canadian side, March’s Balance of Trade rose by C$2.49 billion, higher than the C$1.9 billion estimated.

Aside from macroeconomic data, the USD/CAD has been trading in a narrow range, between 1.2800-50, since early in the Asian session, as traders remained at bay, waiting for the Fed. It is worth noting that the Bank of Canada has its interest rate at 1%, while the Fed sits at 0.50%, about to hike 50-bps. That scenario would be “positive” for the Loonie, but the speed of the Fed tightening could favor the greenback while falling oil prices could put a lid on the Loonie’s rise.

USD/CAD Price Forecast: Technical outlook

Here are some USD/CAD levels to account for ahead of the Federal Reserve meeting. Upwards, the confluence of the 50-hour simple moving average (SMA) and the central pivot at around 1.2850 would be the first resistance area. Once broken, the next resistance would be the R1 daily pivot at 1.2880, followed by March’s 7 daily high at 1.2901.

On the downside, the USD/CAD first support would be the S1 pivot at 1.2810. A breach of the latter would expose the 200-hour SMA at 1.2801, followed by the S2 pivot at 1.2780 and April’s 29 swing low at 1.2718.