(MENAFN- Daily Forex) Potential signal:

• I am a buyer of USD/CAD with a stop loss at 1.39 and a target of 1.4130

USD/CAD trades between the 50-day and 200-day EMAs as momentum indicators signal potential short-term upside. With the FOMC meeting and key data ahead, volatility is expected, but a near-term bounce appears likely barring extreme employment data.

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The US dollar has drifted a little bit lower against the Canadian dollar, as you can see. And we are currently between the 50-day EMA and the 200-day EMA indicator, suggesting that perhaps we are in a rather volatile area, and that would make a certain amount of sense.

But as we are in a little bit of consolidation, I've also got my eye on the stochastic oscillator because we are in an oversold position. If we do, in fact, stay somewhat stable, and I would fully anticipate that we should, it's probably only a matter of time before we get that crossover on the stochastic indicator telling us that maybe it's time to start buying. Whether or not that ends up being a longer-term signal remains to be seen, but in the short term, I can imagine that it may very well bounce as we are a week away from the next FOMC meeting, which of course will be a major factor in where we go next as although people expect a rate cut, the real question is going to be whether or not there are multiple rate cuts. And I just, at this point, still think there are a lot of questions about that Data Risks

This pair will be particularly volatile on Friday as we get employment numbers coming out of Canada. But we also get the PCE Core Price Index numbers, which are one of the Federal Reserve's favorite inflation metrics. So, we do have a significant amount of risk over the Friday session. And as a result, we may get a little bit of a bounce as we just hang out here.

EURUSD Chart by TradingView

Longer term, I still think we will probably go looking to the 1.4250 level, but I also recognize that in the short term, there's probably some hesitation. So, a bounce from here, more likely than not, unless the Canadian employment numbers are a disaster, is probably going to be a short-term range-bound trade set up.

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