• USD/CAD flattens around 1.3685 ahead of the release of FOMC minutes.
• The Fed signaled only one interest rate cut by the end of 2026.
• Investors expect the BoC to hold interest rates steady in the near term.

The USD/CAD pair trades almost flat around 1.3685 during the late Asian trading session on Tuesday. The Loonie pair consolidates ahead of the release of Federal Open Market Committee (FOMC) minutes of the December meeting in the late New York session.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades steadily around 98.00. Still, the DXY is close to its 12-week low of 97.75.

Investors will closely monitor FOMC minutes to get fresh cues on the monetary policy outlook. In the policy meeting, the Fed delivered third straight interest rate cut of 25 basis points (bps), and pushed them lower to 3.50%-3.75%. The Fed also signaled that there will be only one interest rate cut in 2026.

Meanwhile, the Canadian Dollar (CAD) demonstrates a mixed performance against its major peers in a thin trading volume week. However, the outlook of the currency has improved as the Bank of Canada (BoC) is unlikely to cut interest rates in the near term.

USD/CAD technical analysis

USD/CAD trades steadily near 1.3685 on Tuesday. The 20-day Exponential Moving Average (EMA) trends lower and stands above spot, keeping the broader bias bearish as rebounds stall beneath the average. The upside is capped by the 20-day EMA at 1.3777.

The 14-day Relative Strength Index (RSI) at 30.6, near oversold, reflects heavy bearish momentum.

With price holding below the descending average, the short-term tone remains pressured. The price could extend the decline towards 1.3543 if it breaks below Friday’s low of 1.3640.

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