USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US PCE came in line with expectations.
- The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably.
- The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
- The US Consumer Confidence missed expectations across the board.
- The market expects the first rate cut in June.
CAD
- The BoC left interest rates unchanged at 5.00% as expected stating that further easing in underlying inflation is needed.
- The latest Canadian CPI missed expectations across the board with the underlying inflation measures falling.
- On the labour market side, the latest report beat expectations but we saw a fall in wage growth which is something that the BoC is watching closely.
- The Canadian PMIs improved in January although they remain both in contractionary territory.
- The market expects the first rate cut in June.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD broke below the key trendline and triggered a strong selloff as the sellers piled in to position for a drop into the 1.3360 level. The pair recently pulled back into the moving averages from overstretched levels and got rejected as the sellers stepped in again to target the 1.3360 level with a better risk to reward setup.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a strong resistance zone around the 1.35 handle where we had also the confluence of the 50% Fibonacci retracement level and the moving averages. This is where the sellers stepped in with a defined risk above the Fibonacci level to position for a drop into the 1.3360 level. The buyers, on the other hand, will need the price to break above the resistance zone to start targeting the 1.36 handle.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action. We can notice that we have a key support around the 1.3470 level. This is where the buyers are likely to step in with a defined risk below the level to position for a break above the resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into new lows.
Upcoming Events
Today we have the main event of the week, that is the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
