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The USD/CAD pair is trading near 1.3700 as markets await key interest rate decisions from the Federal Reserve (Fed) and the Bank of Canada (BoC) on Wednesday. Traders are adopting a cautious stance, with the Canadian dollar weakening slightly amid uncertainty over potential rate hikes. Both central banks are expected to announce their monetary policy decisions later in the day, which could significantly impact the USD and CAD. The outcome of these decisions will influence the USD/CAD exchange rate, as divergent rate paths between the Fed and BoC could drive volatility. Traders are closely monitoring for hints about future tightening cycles, with the Fed likely to maintain its hawkish stance while the BoC may signal a pause after recent hikes. This dynamic could create opportunities for forex traders to capitalize on short-term movements. For global markets, the decisions will set the tone for risk appetite and commodity currencies like the Canadian dollar. Investors should watch for post-decision statements from both banks to gauge the timing of future rate changes. The USD/CAD pair is expected to remain range-bound until the outcomes clarify the policy trajectory.
