The USDCAD is trading to a low of 1.32722. That took out the swing low from February 15 at 1.3273 and trades at the lowest level since February 2. The low price for the year was also on February 2 at 1.32613. Move below that level and trades will target a key swing area between 1.3207 and 1.32299 (see red numbered circles on the chart above). The price had a ceiling in that area before breaking above in September 2022. The area was revisited in November 2022 before moving to the upside. A revisit to the area should find some support buying on the 1st test, with a break below triggering stops.
Looking at the daily chart, the price action in the USDCAD has been trading up and down and up and down ever since mid-September 2022 when the price broke above the swing area between 1.3207 and 1.32299. Since then, most of the price action has been between 1.3229 and 1.3859. The last 2 1/2 months have a lower ceiling at 1.3667.
The price is moving away from the 38.2% of the move up from the 2021 low at 1.3331. That is now a close risk level for sellers. Stay below is more bearish. Move above and there will likely be more upside probing on the disappointment from the break lower.
The Bank of Canada raise rates by 25 basis points this month ending the conditional pause that lasted for 2 meetings. They also signaled the potential for further rate hike's going forward to combat inflation pressures.
Meanwhile, the Fed is likely to enter their conditional pause today (even if only 1 meeting). The market is still expecting a July hike, but there is still a jobs and inflation report between now and the July meeting.
The central bank shifts have helped to weaken the USCAD pair of late (and is leading to the break below).
