The Bank of Canada and the Federal Reserve both kept interest rates unchanged. With the August 1st tariff deadline approaching, investors remain cautious, fearing the U.S. may impose tariffs on Canadian exports, a factor that could further pressure the Canadian dollar.

The upward momentum of gold prices was curbed as the Fed chose to hold rates unchanged at its July rate meeting, while Powell released hawkish signals.

The Fed held interest rates steady, with Chair Jerome Powell refraining from signaling imminent rate cuts, bolstering market confidence in the U.S. dollar. The DXY (U.S. Dollar Index) surged past 99.9, marking a multi-week high.

A strong bullish reaction from that level could initiate a fresh upward leg, continuing the broader bullish trend.

This divergence adds weight to the case for a trend reversal, increasing the likelihood of a recovery from current levels.

The USDCAD extended its gains for the fourth consecutive day on Wednesday, surpassing 1.3790 in early European trading and reaching a one-and-a-half-week high. Market consensus anticipates the Bank of Canada to hold the overnight rate steady at 2.75% during the upcoming meeting, reflecting a cautious stance on the current economic conditions.