Fundamental Overview
The USD continues to remain under pressure amid positive risk sentiment and the imminent rate cuts from the Fed which should help global growth. These are generally bearish drivers for the greenback.
In fact, the recent appreciation of the CAD has been mostly driven by the US Dollar side of the equation. The Bank of Canada started its easing cycle before the Fed and the market expects the central bank to continue to deliver rate cuts at each remaining meeting for this year.
Today, we get the latest Canadian CPI figures and although they shouldn’t change much in terms of market pricing, the release might still move the CAD and provide opportunities to either fade the reaction or go with it.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD dropped all the way back to the key support around the 1.36 handle. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally back into the resistance at 1.3785. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.35 handle next.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a better risk to reward setup around the trendline to position for a break below the support. The buyers, on the other hand, will want to see the price breaking above the trendline to increase the bullish bets into the 1.3785 resistance.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor downward trendline defining the current bearish momentum. The sellers will likely lean on it with a defined risk above it to position for a break below the support, while the buyers will look for a break to increase the bullish bets into the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the Canadian CPI report. On Thursday, we get the US Jobless Claims figures and the US PMIs. On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole Symposium.
