Both the EUR/USD and USD/CAD currency pairs are trading cautiously ahead of key central bank policy announcements, with the Federal Reserve (Fed) and European Central Bank (ECB) expected to leave interest rates unchanged this week. The EUR/USD pair holds onto Monday’s gains slightly above 1.1500 during the European trading session on Tuesday, as the US Dollar Index (DXY) trades marginally lower near 99.70. Investors are closely watching the Fed’s upcoming policy meeting, anticipating rates to remain in the 3.50%-3.75% range, especially as the recent spike in oil prices due to Middle East conflicts has heightened global inflation expectations [1].
Similarly, the USD/CAD pair consolidates around 1.3700, reflecting investor caution ahead of both the Fed and Bank of Canada (BoC) policy decisions. The CME FedWatch tool indicates that the Fed is unlikely to cut rates before September, with the probability of a September rate cut dropping to nearly 50% from 73% a week ago. Surging oil prices have increased gasoline costs in the US and other major economies, potentially impacting household purchasing power [2]. As of writing, the DXY is flat just below 100.00, having surrendered earlier gains [2].
On the technical front, EUR/USD remains below the 20-day Exponential Moving Average (EMA) around 1.16, maintaining a bearish bias. Resistance is noted at 1.1530 and 1.1630, while support lies at 1.1415, with further downside targets at 1.1360 and 1.1300. The Relative Strength Index (RSI) hovers in the mid-30s, indicating weak momentum [1]. For USD/CAD, the pair is mildly bullish above the 20-day EMA, with resistance at 1.3715 and 1.3750, and support at 1.3655, 1.3615, and 1.3580. The RSI has been in a sideways trend between 40.00-60.00 for over six weeks [2].
ECB officials have signaled no urgency for monetary policy adjustments, as inflationary pressures remain close to the 2% target. The ECB is anticipated to keep its deposit facility rate at 2%, with the next scheduled release on March 19, 2026 [1].
CONCLUSION
Markets are in a holding pattern as investors await policy signals from the Fed, ECB, and BoC, with all three central banks expected to keep rates steady amid heightened inflation risks from Middle East-driven oil price surges. Technical indicators suggest limited momentum for both EUR/USD and USD/CAD, reflecting uncertainty and cautious sentiment. The outcome of these meetings will be closely watched for any forward guidance on future rate moves.