Why Is USDCAD Rising Above 1.3600? | Bank of Canada Rate Decision Preview

The XRP Calculator profitUSDCAD currency pair maintains its bullish trajectory in Wednesday's Asian session, hovering around the psychologically significant 1.3600 level. Market participants are positioning cautiously ahead of two major macroeconomic events that could determine near-term direction for the pair.Technical indicators show the pair has established consistent higher lows since mid-February, with the 50-day moving average now acting as dynamic support. The 1.3600 level represents both a psychological round number and previous resistance zone from late 2023. A confirmed breakout above this level could open the path toward 1.3650, while failure to sustain gains might trigger profit-taking toward 1.3550 support.All eyes turn to the Bank of Canada's policy announcement scheduled for later today. Economists widely anticipate policymakers will maintain the overnight rate at 5.00%, marking the fifth consecutive hold since July 2023. Market-implied probabilities suggest just a 19% chance of any policy adjustment, with particular attention on whether the central bank maintains its current quantitative tightening program.The accompanying monetary policy statement and subsequent press conference will be scrutinized for clues about future policy direction. Recent Canadian economic data presents mixed signals - while GDP growth exceeded expectations in Q4 2023, core inflation metrics remain stubbornly above the 2% target. Any shift in language regarding the balance between growth risks and inflation persistence could spark volatility.Simultaneously, Federal Reserve Chair Jerome Powell begins his semi-annual testimony before Congress. His remarks will be parsed for insights following recent mixed US economic data. February's ISM Services PMI disappointed at 52.6 versus 53.0 expected, though the New Orders component showed expansion at 56.1. The employment subindex dipped into contraction territory at 48.0, potentially signaling labor market softening.Friday's US Nonfarm Payrolls report looms as the next major catalyst, with consensus expecting 200,000 new jobs. The Canadian dollar's sensitivity to crude oil prices adds another dimension, as WTI crude maintains its $78-$80 trading range. Energy market developments could influence CAD crosses independent of monetary policy factors.Trading strategies should account for potential increased volatility around these events, with particular attention to technical levels and any divergence between expected and actual policy communications. The interplay between Fed and BoC policy paths continues to drive medium-term USDCAD direction.