Anna 
The USD/CAD pair surged to 1.3550 during Tuesday’s European session after breaking above a two-day consolidation range of 1.3510-1.3550. This rise was driven by increased market uncertainty ahead of key events.
In the London session, S&P500 futures experienced nominal losses, indicating a shift towards a risk-averse sentiment among investors. Meanwhile, the US Dollar Index (DXY) continued its upward trajectory for the fourth consecutive trading session, reaching a weekly high at 103.87. The uncertainty surrounding the Federal Reserve’s upcoming interest rate decision, scheduled for Wednesday, contributed to the strengthening of the US dollar.
According to the CME FedWatch tool, market participants expect the central bank to maintain interest rates unchanged in the range of 5.25%-5.50%. Investors are closely monitoring the Fed’s decision for any signals regarding potential rate cuts, which are currently anticipated at the June policy meeting.
The movement of the Canadian Dollar will likely be influenced by Canada’s Consumer Price Index (CPI) data for February, set to be released at 12:30 GMT. Analysts predict that annual headline inflation will show a faster growth rate of 3.1% compared to the previous month’s 2.9%.
From a technical perspective, the USD/CAD pair is nearing the horizontal resistance of the Ascending Triangle pattern formed on a daily timeframe. The pattern, plotted from the December 7 high at 1.3620 and the upward-sloping border from the December 27 low at 1.3177, suggests a period of sharp volatility contraction.
Despite the bullish near-term outlook supported by the 20-day Exponential Moving Average (EMA) near 1.3520, investors remain cautious, as indicated by the 14-period Relative Strength Index (RSI) oscillating within the 40.00-60.00 range.
If the pair surpasses the December 7 high at 1.3620, it could rally towards the May 26 high at 1.3655 and potentially reach the psychological resistance level of 1.3700. Conversely, a downside move below the February 22 low at 1.3441 may expose the pair to the February 9 low at 1.3413, with further downside potential towards the January 15 low at 1.3382.
