Fundamental Overview
The lack of catalysts recently kept the US Dollar supported across the board despite the slowdown in momentum. The market might now be looking forward to the first weeks of November when we will get the key economic data, the FOMC decision and the US elections.
There’s been also a good argument that the markets are already positioning for a Trump victory and that should translate in USD strength as it should appreciate on higher growth and less rate cuts expectations. Nevertheless, not all markets have been in sync with this view.
On the CAD side, the latest Canadian CPI missed expectations and sealed the 50 bps cut at the upcoming meeting with the market seeing now a 99% probability from 48% before the inflation report. The market then sees another rate cut of at least 25 bps in December and roughly four more in 2025.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD eventually bounced back above the 1.3785 level and extended the rally into the 1.3850 level. We are now near a key resistance zone.
This is where we can expect the sellers to step in with a defined risk above the 1.3860 resistance to position for a drop back into the 1.36 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the break above the 1.3785 level that led to a more bullish price action into the key resistance. There’s not much else we can glean from this timeframe, so we need to zoom in to see some more details.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for further upside, while the sellers will want to see the price breaking lower to target a drop back into the 1.3785 level. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the BoC rate decision. On Thursday, we get the Flash US PMIs, and the US Jobless Claims figures. On Friday, we conclude the week with the Canadian retail sales data.
