Heading into a key event, traders look to both the fundamental story and the technical levels for clues. The news provides the catalyst, the price action reveals how the market is interpreting it, and the technical levels help define the bias, the risk, and the next targets.

For USDCAD, the clues have been pointing higher over the last few weeks. The breakdown in trade talks between the US and Canada has contributed to Canadian dollar weakness, pushing the pair to the upside. A rising USDCAD reflects a stronger US dollar relative to the Canadian dollar. The Canadian dollar is also sensitive to commodity prices, particularly crude oil, given Canada's role as a major energy exporter, which adds another fundamental input traders monitor alongside trade and rate developments.

The Bank of Canada's rate decision adds a second layer of fundamental risk. Interest rate differentials between the US and Canada are a key driver of USDCAD, as relative yields influence capital flows between the two currencies. A surprise or shift in the Bank's accompanying guidance typically translates into an immediate repricing of those expectations, which is why the technical levels below matter as benchmarks for judging the initial reaction.

The technical picture reinforced the bullish bias on Friday and again yesterday, when buyers leaned against support near the 200-hour and 200-day moving averages. The 200-day moving average, currently at 1.3839, held on both occasions. Sellers had their shot to push below that key longer-term barometer. They could not get it done, and buyers took the price higher.

Yesterday's rally subsequently carried the pair above another important technical area: the 100-hour moving average and the 38.2% retracement of the decline from the late-July high to the August low. Both currently converge at 1.3882. When two technical tools line up at the same level, it gives traders a clearer reference point for defining risk and bias. Stay above, and buyers retain more control. Move below, and the near-term bias shifts more to the downside.

Today, the rally extended above the 100-day moving average at 1.39179 and the 50% midpoint of that same decline at 1.39286. However, momentum stalled against a downward-sloping trendline near the session high. Buyers had their opportunity to extend the break, but could not sustain it.

The subsequent rotation lower has taken the price back below both the 50% midpoint and the 100-day moving average. That leaves the pair between support at 1.3882 and resistance beginning at 1.39179 as traders await the Bank of Canada's interest rate decision.

The levels to watch are clear:

• Support: The 100-hour moving average and 38.2% retracement at 1.3882. Holding above keeps buyers in the game. A sustained break below would weaken the bullish bias and open the door toward the 200-day moving average at 1.3839.
• Initial resistance: The 100-day moving average at 1.39179. Buyers need to reclaim and stay above that level to regain upside momentum.
• Additional resistance: The 50% midpoint and downward-sloping trendline near 1.3929–1.3934. A sustained break above that area would strengthen the bullish case.

The decision and accompanying guidance will provide the next fundamental clues. The technical levels will help traders judge whether the initial reaction has staying power. A break is one thing; staying above or below the broken level is what gives traders more confidence in the move.

Successful trading starts with understanding the bias, defining the risk, and identifying the targets. In the video, the author walks through those levels and explains what buyers and sellers need to do to take control.