USD/CAD Price Forecast: Aims to revisit over two-month high of 1.3840

• USD/CAD strives to revisit the immediate resistance of 1.3840 ahead of the BoC's policy decision on Wednesday.
• The BoC is expected to cut interest rates by 50 bps to 3.75%.
• The next move in the US Dollar will be influenced by headlines regarding US presidential elections.

The USD/CAD pair extends its winning spree for the third trading session on Monday. The Loonie pair sustains above 1.3800 and aims to recapture the 11-month high of 1.3840 ahead of the Bank of Canada's (BoC) interest rate decision, which will be announced on Wednesday.

Economists expect the BoC to cut its borrowing rates for the fourth time in a row. However, the pace at which it is expected to lower interest rates is larger-than-usual. With Canadian inflation remaining under control and the jobless rate beyond 6% despite back-to-back rate cuts, the BoC is expected to cut rates by 50 basis points (bps) to 3.75%.

This would keep the Canadian Dollar (CAD) on the back for a longer period as other central bankers such as the Federal Reserve (Fed), the Bank of England (BoE), and the European Central Bank (ECB) are expected to follow a gradual policy-easing cycle.

Meanwhile, sheer strength in the US Dollar (USD) has also kept the Loonie pair on the front foot. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, resumes its upside journey after a mild correction on Friday. Growing uncertainty over the United States (US) presidential elections has strengthened the US Dollar's appeal as a safe haven.

USD/CAD witnessed strong buying interest after a breakout above the September 19 high around 1.3650.

The near-term outlook of the Loonie pair has strengthened further as the 20- and 50-day Exponential Moving Averages (EMAs) near 1.3645 and 1.3690, respectively, are sloping higher.

The 14-day Relative Strength Index (RSI) oscillates inside the bullish range of 60.00-80.00, pointing to an active momentum.

More upside towards the round-level resistance of 1.3900 and Year-To-Date (YTD) high of 1.3945 would appear if the pair decisively breaks above April 16 high of 1.3846.

In an alternate scenario, a downside move below the September 19 high of around 1.3650 will expose the asset to a May 16 low near 1.3600, followed by a September 13 high of 1.3538.

USD/CAD daily chart