Investing.com - The U.S. dollar moved lower against the Canadian dollar on Monday, pulling further back from four-and-a-half year highs as investors looked ahead to the outcome of the upcoming Federal Reserve policy meeting on Wednesday.
USD/CAD hit 1.1032, the lowest since last Wednesday; the pair was last down 0.45% to 1.1036.
The pair was likely to find support at 1.1000 and resistance at 1.1100.
Investors were awaiting the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.
The loonie, as the Canadian dollar is also known, found lingering support after data on Friday showed that the annual rate of inflation in Canada rose more strongly than forecast in December, but remained well below the Bank of Canada’s 2% target.
The loonie tumbled to the lowest level against the dollar since July 2009 last week after the BoC said it expects inflation to remain well below target for some time and left the door open to a rate cut.
Market sentiment was helped signs of stabilization in emerging market currencies after Turkey’s central bank said it would hold an extraordinary policy meeting on Tuesday to discuss measures to ensure price stability. The announcement came after the lira hit the latest in a series of record lows against the dollar.
Emerging market currencies have been hard hit since the Fed began scaling back its asset purchase program, while worries over political instability and the outlook for growth for some countries also weighed.
Elsewhere, the loonie was lower against the euro, with EUR/CAD down 0.48% to 1.5087, down from the four-year highs of 1.5273 reached last Thursday.