Fundamental Overview
The USD has been generally under pressure since the benign US CPI report last week as the hawkish expectations subsided and the market switched its focus from inflation back to growth. This triggered a positive risk sentiment which is generally negative for the greenback.
The CAD, on the other hand, got pressured from the weaker than expected Canadian CPI figures which raised the chances of a rate cut in June (although it remains basically a coinflip). If the positive risk sentiment were to continue though, we might see the CAD gaining ground against the USD anyway.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD bounced from the key support zone around the 1.36 handle where we had the confluence of the trendline and the 61.8% Fibonacci retracement level and extended the rally into the 1.37 handle following the weaker Canadian CPI report.
The buyers will need the price to break above the 1.37 handle to start targeting the 1.38 handle next. The sellers, on the other hand, will want to see the price breaking below the trendline and especially the 1.36 support to gain more conviction and increase the bearish bets into the 1.34 handle.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the sellers stepped in around the 1.37 handle where they had also the confluence of the downward trendline and the 61.8% Fibonacci retracement level. As previously mentioned, they will need the price to fall below the 1.36 support to increase the bearish bets into new lows.
The buyers, on the other hand, will want to see the price breaking above the trendline to invalidate the bearish setup and increase the bullish bets into the 1.38 handle next.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a good support around the 1.3650 level where we can find the confluence of the upward minor trendline and the 61.8% Fibonacci retracement level.
This is where we can expect the buyers to step in again to position for a break above the downward trendline with a better risk to reward setup. The sellers, on the other hand, might want to pile in on a break lower to increase the bearish bets in expectations of a breakout to the downside.
Upcoming Catalysts
Today we get the latest US PMIs and Jobless Claims figures. Tomorrow, we conclude with the Canadian Retail Sales data.
