Fundamental Overview
Yesterday, the USD weakened across the board following a benign US CPI report where the data came in line with expectations. The market firmed up the rate cuts expectations with September and December now fully priced in. We saw a general risk-on sentiment as a result and barring negative surprises in the following days and weeks, this trend might have some more legs. Today’s US jobless claims data don’t change the picture, on the contrary, they might reaffirm the positive sentiment.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD failed to sustain the breakout below the key support zone around the 1.36 handle. This support has been a tough nut to crack, so the sellers will want to see the price falling back below the zone to increase their conviction and target a drop into the 1.34 handle next. The buyers, on the other hand, will likely keep on piling in around these levels as they have a defined risk to reward setup with the target standing around the cycle highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a downward trendline defining the downtrend on this timeframe. The sellers might want to lean on the trendline to position for a break below the support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the cycle highs.
Upcoming Catalysts
We don’t have any other noteworthy catalyst for this week, so the markets will likely follow the path of least resistance set by the US CPI report.
