The market expects the Fed to hike by 25 bps at the July meeting given that the economic data kept on surprising to the upside since the last FOMC meeting, although a lot will depend on the next NFP and CPI reports. Fed Chair Powell reiterated that they expect two or more rate hikes if the economy performs as expected.
On a different note, the BoC is likely to remain on hold at this meeting given the miss in the CPI report although the disinflationary trend has slowed considerably, and they may opt for a hawkish skip.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the sellers leant on the red 21 moving average as shown by the multiple wicks rejecting the moving average. This may have been just a pullback and if we see a clear break to the downside below the 1.3225 level, we may start to see more selling pressure and eventually a new lower low.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD falling into and below the 1.3225 support. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The price broke above the trendline and the 1.3225 level which should signal a bigger pullback to the 1.34 handle, but the price will need to break above the 1.33 resistance to confirm that. At the moment, we’re seeing some consolidation near the 1.3225 level, so what happens next will likely decide the direction.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong support zone at 1.3225 where we can also find a previous swing high point and the 38.2% Fibonacci retracement level. A break to the downside would see the sellers pile in and target a new lower low. The buyers, on the other hand, should step in here and target a new higher high.
Upcoming Events
Today it’s a holiday in the US for Independence Day, so liquidity will be thinner. Nevertheless, in the following days we will get major economic data releases like the US Jobless Claims and ISM Services PMI on Thursday and the main release of the week: the US NFP report on Friday.
