USD/CAD Comatose following bearish hammer formation

USD/CAD pair is trading comatose around 1.32 levels after having formed a bearish hammer candle stick formation on the daily chart.

Focus on oil ahead of Fed and BOJ

The pair is likely to track the movement in the oil prices as the data calendar in Canada is empty. US housing data due for release today could offer some clues to the pair, although the main event for the week is obviously the Fed and BOJ rate decisions.

With respect to Fed, the focus is likely to be on the interest rate dot chart and economic forecasts. Meanwhile, the Bank of Japan could initiate operation reverse twist – trim long duration bond purchases and increase short duration bond purchases.

Markets fear that BOJ’s operation reverse twist could lead to steepening of the bond yield curve across the globe, resulting in the equity market sell-off.

USD/CAD Technical Levels

A break above 1.3230 (previous day’s high) would open doors for 1.3249 (Sep 169 high). A violation there preferably on day end close could yield a quick fire rally to 1.3406 (Mar 17 high). On the other hand, a breach of 1.3190 (Sep 13 low) would expose 1.3136 (previous day’s low), under which the spot could target 1.3053 (Sep 9 high).