Fundamental Overview
The USD remains under pressure amid the aggressive market pricing for rate cuts and better global growth expectations following the recent huge Chinese easing measures. It’s now a battle between global growth supporting the risk sentiment and weighing on the greenback and the aggressive rates pricing which could be scaled back if the US data starts to pick up.
On the CAD side, the latest soft Canadian CPI raised the probabilities for a 50 bps cut at the upcoming meeting as BoC’s Macklem hinted to a possibility of delivering larger cuts in case growth and inflation were to weaken more than expected. The market sees a 47% probability for such a move.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD dropped all the way back to the recent lows around the 1.3420 level. This is where the buyers stepped in to position for a rally back into the 1.36 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.32 handle next.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke above the downward trendline today and stalled at the resistance zone around the 1.35 handle. The buyers will want to see the price breaking higher to increase the bullish bets into the 1.36 resistance, while the sellers will likely step in around these levels to target a break below the 1.3420 level.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else to add but a drop below the most recent higher low at 1.3455 would likely see the bearish momentum increasing. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the Canadian GDP and the US PCE.