On the daily USDCAD chart below, we can see that after breaking the key support level at 1.3664, the pair just sold off massively helped also by the rising oil prices. Yesterday, oil even gapped up in a big way following surprise cuts by OPEC+ on Sunday.
The USD is also under pressure as the market is trading on interest rates expectations at the moment with the Fed expected to end its hiking cycle at the May meeting barring any awful economic data. At this point, only very ugly economic data can help the US Dollar as the market would switch from the rates trade to the recession trade and the USD would be sought as a safe haven .
On the 4 hour chart below, we can see that the downtrend is well sustained. The moving averages act as resistance and the buyers will want to wait for them to cross to the upside to give some confirmation of a change in trend. Yesterday we also got very weak ISM Manufacturing PMI data, which may be an early sign that the economic data are about to turn south again after a bounce in January and February. It may also be a sign that the recent banking troubles may have indeed caused some pain.
On the 1 hour chart below, we can see that after breaking the support the price started to trade within a channel. If we get a pullback, the sellers may lean on the upper bound of the channel and a Fibonacci retracement level. The buyers, on the other hand, will want to see a breakout to the upside before piling in and target the previous support turned resistance at 1.3664. Tomorrow we have the ISM Services PMI and if even those tumble, then we may start to see the market trading the recession.
