USD/CAD Price Forecast: Trades at make or a break near 1.3450

• USD/CAD falls slightly ahead of the Fed Powell's speech.
• Investors look for fresh interest rate cues for the November meeting.
• The Canadian economy is estimated to have barely grown in July.

The USD/CAD pair edges lower to near 1.3465 in Thursday's European session after a strong recovery on Wednesday. The Loonie asset faces a mild sell-off as the US Dollar (USD) struggles to extend recovery, with the US Dollar Index (DXY) facing pressure near 101.00.

The next move in the US Dollar will be guided by Fed Chair Jerome Powell's speech at 13:20 GMT in which he is expected to provide fresh guidance on interest rates. In last week's press conference after the policy decision of interest rate reduction by 50 basis points (bps) to 4.75%-5.00%, the comments from Jerome Powell suggested that the larger-than-usual rate cut will not be the new normal.

On the contrary, the probability of the Fed delivering another 50 bps interest rate cut in November is 61%, higher than 39% a week ago, according to the CME FedWatch tool.

Meanwhile, the Canadian Dollar (CAD) will be influenced by the monthly Gross Domestic Product (GDP) data for July, which will be published on Friday. Economists estimate the Canadian economy to have grown by 0.1% after remaining flat in June.

USD/CAD prints a fresh swing low near 1.3400 on a daily timeframe, suggesting a firm bearish trend. The Loonie asset weakens after slipping below the August 28 low of 1.3440. A declining 20-day Exponential Moving Average (EMA) near 1.3545 indicates more downside.

The 14-day Relative Strength Index delivers a range shift move into the 20.00-60.00 territory from 40.00-80.00, which suggests that pullbacks would be considered as selling opportunities by investors.

Going forward, a further correction by the major below the immediate support of 1.3400 would expose it to January 31 low of 1.3360 and June 9 low of 1.3340.

In an alternate scenario, a recovery move above the psychological support of 1.3500 would drive the asset towards April 5 low of 1.3540, followed by September 20 high of 1.3590.

USD/CAD daily chart