USDCAD Technical Analysis – The sellers remain in control

US:

• ·The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations with the Core measure continuing to show
  disinflation.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also
  yesterday with another beat in Jobless Claims.
• The US Consumer Confidence this
  week missed expectations although the jobs details were positive.
• The market doesn’t expect the Fed to hike again at
  the moment.

Canada:

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a hawkish speech which points to another rate hike
  if the data remains strong into the next policy meeting.
• The Canadian underlying inflation
  data has been beating expectations month after month and last week we got another beat across the board.
• On the labour market side, the recent
  report showed another uptick in wage growth and this is something that Governor
  Macklem said the BoC is watching carefully.
• There’s now basically a 50/50 chance
  that the BoC hikes at the next meeting.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD
bounced on the strong support around
the 1.34 handle where we had also the 50% Fibonacci retracement level.
The pair pulled back into the red 21 moving average and the
50% Fibonacci retracement level of the entire bearish leg where it found strong
sellers. It’s starting to look like the pair is set for another bearish move as
we already got a new lower low when the price fell below the 1.3489 level and
the moving averages are crossed to the downside.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price broke
below the counter-trendline
and the sellers piled in to target the 1.34 support zone. We can expect the
buyers to step in again at the support with a defined risk below it to target
again the highs, but for now the bias remains bearish.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that on
this timeframe the trend is now bearish as the price is printing lower lows and
lower highs and the moving averages are crossed to the downside. If we get a
pullback, the sellers should lean on the previous swing low around the 1.3470
level where there’s confluence with the 38.2% Fibonacci retracement level and
the red 21 moving average. On the upside, the buyers will want to see the price
breaking above the downward trendline to position for a rally into the highs.

Upcoming Events

Today the only notable release will be the US PCE
report. The data is unlikely to change anything for the market unless we get
some big surprises.