USD/CAD tumbles to 1-week lows as Fed leaves rates unchanged

After trading during days sideways around 1.32, USD/CAD broke to the downside as the US dollar tumbled after Fed’s decision. The US central bank left its benchmark interest rate unchanged and signaled that the case for a rate hike has strengthened. Three FOMC members voted for a rate hike at today’s meeting.

Despite signals of a rate hike, the US dollar weakened across the board and pushed USD/CAD to the downside. The pair broke below 1.3135 and fell to 1.3100 hitting the lowest level since September 13.

The area around 1.3100 is offering support and the pair trading marginally above, still with a stronger bearish momentum. From the level is closed yesterday is down 80 pips, losing ground for the third day in a row. Today’s performance is the worst for the US dollar against the Loonie in two weeks.

Further correction?

Today decline below the 1.3130 area could signal a more deep correction. The pair failed during the last five days to break the key resistance area around 1.3250 and then it turned to the downside. The potential target could be seen at 1.3060/70, where the 20-day moving average stands. A decline below could signal more declines ahead. On the opposite direction, if it climbs back above 1.3140, the bearish pressure would ease.