Loonie Weakens as Fed Cut Expectations Fade United States Dollar / Canadian DollarCMCMARKETS:USDCADcmcmarketsThe Canadian dollar has been weakening against the US dollar, and signs suggest that this trend may continue as USD/CAD approaches a key level of resistance around 1.4070. This may be particularly true now that the market sees the odds of a Federal Reserve rate cut in December falling to below 70%, down from about 94% prior to last week’s FOMC meeting. The two-hour technical chart shows USD/CAD breaking out of what appears to be a bull flag, suggesting further weakness in the Canadian dollar may lie ahead. If the USD/CAD can move above the top of the flagpole, which is currently acting as resistance, it could pave the way for a move towards 1.4150. On the daily chart, the Canadian dollar is now trading firmly above its 10-day exponential moving average and appears to be showing positive momentum on the Relative Strength Index, which has been trending higher since forming a bullish divergence from early spring into mid-summer, alongside a triple bottom on the price chart. Taken together, these factors suggest that the Canadian dollar may be on course to weaken even further, potentially beyond 1.4150, with USD/CAD possibly moving back towards the 1.43 area once this move has fully unfolded. However, it should be noted that, with the US government currently shut down, there could be economic impacts that the market has not yet fully assessed. This means that if USD/CAD fails to break above 1.4070, the next significant support level may not emerge until around 1.3870. Written by Michael J. Kramer, founder of Mott Capital Management. Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.