The US dollar was retreating ahead of the Fed monetary policy meeting. The volatility is very likely to increase in the nearest future. Everything will depend on the actions and rhetoric of Jerome Powell and his team. Meanwhile, the Canadian dollar was trading flat. The market sentiment remains positive. Amid this optimism, the appetite for risk has increased. Traders still hope that the lingering US-China trade stand-off will finally be resolved. According to Donald Trump, the negotiations are running smooth and ahead of schedule. The demand for risky asses is boosted by expectations of the monetary policy easing by the Federal Reserve. Lately, the Fed officials have been doing little to change the dovish expectations of market participants. So, most analysts are anticipating the interest rate will be reduced. Currently, the odds for a quarter-point rate cut are 94.1%. Moreover, such a move can come along with the hawkish comments of Jerome Powell. While the US dollar is weakening ahead of the Fed monetary policy meeting, after it the trend may reverse direction. The US dollar index was trading with a slight downward correction at 97.82 in the afternoon deals. It’s difficult to say what trend is prevailing now, as traders took the wait-and-see approach ahead of the FOMC meeting. As for the American macroeconomic statistics, the consumer sentiment data for October is scheduled for release today. Meanwhile, the Canadian dollar lacked momentum. The USD/CAD pair was trading flat. The quotes were hovering near the strong support at 1.30. In the past two weeks, the Canadian currency has skyrocketed by 300 pips against its American counterpart. Tomorrow, the Bank of Canada will also hold a monetary policy meeting, so the support level can be broken amid this event. Anyway, most indicators are suggesting that the loonie will extend gains. As widely-expected, the Canadian financial watchdog will maintain status quo unlike the Federal Reserve. Such a difference in the monetary policy decisions may be favorable for the loonie. However, traders have already factored in both these decisions. Therefore, it will be the post-meeting comments that will shape the further movements in the USD/CAD pair. Apart from policy meetings of the American, Canadian, and Japanese central banks, currency flows will influence the demand for the US dollar. Besides, traders are waiting for the publication of the third-quarter GDP data and the nonfarm payrolls report for October. The economic growth report will be published just before the announcement of the Fed interest rate decision, so it will have a more significant impact than the jobs data.