The USD/CAD gains support from the 50-Day SMA (1.2970) to clear the July high (1.3224), and the exchange rate may scale towards the November 2020 high (1.3371) as it clears the opening range for September.
The currency pair trades to a fresh yearly high of 1.3252, extending its advance after the US Consumer Price Index (CPI), data release, which came in stronger than anticipated. The exchange rate might keep appreciating ahead of the Federal Reserve interest rate decision on September 21 as it extends the series of higher highs and lows from earlier this week.
Also, the Federal Open Market Committee (FOMC) rate decision might influence the near-term outlook for USD/CAD as the CME FedWatch Tool reflects a 100% probability for a 75bp rate hike, and the exchange rate may continue to trade to fresh yearly highs for the rest of the month if the central bank continues its inflation combating approach.
In addition, the FOMC may continue to endorse hawkish forward guidance as the committee plans to execute a restrictive policy. The update to the Summary of Economic Projections (SEP) may boost the ongoing rally in USD/CAD if Chairman Jerome Powell and Co. project a steeper path for US interest rates.