The Bank of Canada will hold its meeting on Wednesday next week, and economists fear that in the face of accelerating inflation, the Canadian central bank's leaders will be forced to implement another interest rate hike, despite the risks of plunging the national economy into recession.

Meanwhile, USD/CAD has been rising since mid-last month and last Friday reached a 12-week high at 1.3640. Overall, the pair maintains a positive dynamic as market participants continue to assess the results of Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium. He confirmed the Fed's readiness for further monetary policy tightening.

As of writing, USD/CAD was trading near the 1.3600 mark, remaining in the bull market zone: medium-term—above key support levels of 1.3405 (144 EMA, 50 EMA on the daily chart), 1.3380 (200 EMA on the daily chart), and long-term—above key support levels of 1.3170 (144 EMA on the weekly chart), 1.3100 (200 EMA on the weekly chart).

Given the strong bullish impulse and fundamental factors, it is logical to expect further growth of the pair. The nearest targets are located at local resistance levels of 1.3665 and 1.3700, with distant ones at 1.3810 and 1.3860.

In an alternative scenario, USD/CAD will resume its decline. The first sell signal is a break below the 1.3592 support level (200 EMA on the 15-minute chart) and today's low of 1.3586, with confirmation being a break of the crucial short-term support level of 1.3553 (200 EMA on the 1-hour chart).

The targets of the downward correction are the local support levels of 1.3500 and 1.3450 (23.6% Fibonacci retracement level of the growth wave from 0.9700 to 1.4600, reached in June 2016). If this scenario continues to unfold, breaking the key support levels of 1.3405 and 1.3380 will bring USD/CAD back into the medium-term bearish zone, and breaking the support levels of 1.3170 and 1.3100 into the long-term bearish zone, making short positions preferable again.

Support Levels: 1.3593, 1.3586, 1.3553, 1.3500, 1.3450, 1.3425, 1.3405, 1.3380, 1.3320, 1.3300, 1.3200, 1.3170, 1.3100

Resistance Levels: 1.3640, 1.3665, 1.3700, 1.3810, 1.3860, 1.3900, 1.3970, 1.4000.