Fundamental Overview
The USD yesterday was sold across the board following the soft US CPI report. The data made the market to price back in two cuts for this year. Later in the day though we got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this year despite the soft US CPI report.
This gave the greenback a boost, but Fed Chair Powell backpedalled on the projections making them a bit less worrying as the central bank remains very data dependent. So, all in all, the US Dollar might still come under pressure as the risk sentiment should improve thanks to the soft US CPI.
The CAD, on the other hand, has been a bit under pressure as the Bank of Canada delivered a slightly more dovish cut than expected. Overall, the central bank said that they remain data dependent and the rate cuts expectations didn’t change much.
If we go back into risk-on sentiment, the CAD might appreciate amid a general US Dollar weakness.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD fell back inside the range following the soft US CPI report and then pulled back to retest the support-turned-resistance on a more hawkish than expected FOMC decision.
This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the 1.36 support. The buyers, on the other hand, will want to see the price rallying back above the resistance to regain some conviction and target a break above the 1.38 handle.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the drop on the US CPI and then the move back up on the FOMC decision. There’s not much more to add here as the sellers will look for a drop from the resistance, while the buyers will look for a breakout to the upside to keep targeting new highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price yesterday has also broke below the recent trendline that was defining the bullish trend from the 1.36 support. If the price were to fall below the 1.3710 level, the sellers will have another confirmation that the bearish momentum could pick up steam. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US PPI and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment survey.
