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It’s a light trading data kind of day so risk sentiment will likely factor in today’s prices.

Will USD/CAD extend its pullback ahead of the FOMC policy decision?

Before moving on, ICYMI, yesterday’s watchlist checked out EUR/GBP pulling back from a rising channel pattern. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

China lifts two-week lockdown in Chengdu, city of 21 million

OPEC+ is now 3.6 million bpd below its oil production target

NAHB: US homebuilder sentiment falls for ninth straight month to 46 in September

Japan’s annual inflation hits near 8-year high of 3.0% in August

China leaves lending benchmarks unchanged amid global rate squeeze

RBA sees rates getting closer to normal settings, minutes show

Biden to release 10 million oil barrels ahead of EU-Russian ban

Upcoming Potential Catalysts on the Forex Economic Calendar:

Canada’s monthly CPI at 12:30 pm GMT
U.S. housing starts at 12:30 pm GMT
ECB President Lagarde to give a speech at 5:00 pm GMT
AU MI leading index at 12:30 am GMT (Sept 21)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/CAD

USD/CAD 4-hour Forex Chart

USD/CAD 4-hour Forex Chart

In case you missed it, the U.S. dollar is giving back pips across the board ahead of the Fed’s highly anticipated policy announcement.

USD/CAD turned lower from the 1.3300 major psychological handle and is now trading closer to the 1.3250 area.

Keep an eye out for the 1.3150 – 1.3200 zone that has served as resistance in mid-July and earlier this month.

Not only is the area a previous resistance, but it also lines up with the 38.2% – 50% Fibonacci retracement levels of last week’s upswing.

A pullback to the 1.3150 – 1.3200 levels would also bring USD closer to the 4-hour chart’s 100 SMA and likely exhaust the bearish divergence that we’re seeing on the chart.

If today’s Canadian CPI release comes in faster than expected, or if the anti-dollar theme extends to the next trading sessions, then USD/CAD may extend its bearish momentum.

If traders start pricing in the Fed’s interest rate hike, however, then USD could turn higher from its current prices and retest its September highs against CAD.