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 with risk assets like
stocks and bitcoin gaining ground. Such an environment is generally negative
for the greenback.
The CAD should remain
overall supported, but we will get the Canadian CPI report today and that might
weigh on it in the short-term if the data surprises to the downside. In the
bigger picture, the pair might keep falling as the risk-on sentiment from
falling inflation and positive growth impulse weighs on the US Dollar.
USDCAD Technical
Analysis – Daily Timeframe
USDCAD Daily
On the daily
chart, we can see that USDCAD consolidated right at the key support
zone around the 1.36 handle where we can also find the confluence
of the trendline
and the 61.8% Fibonacci
retracement level.
This is where the
buyers keep stepping in with a defined risk below the support to position for a
rally back into the cycle highs around the 1.39 handle. The sellers will want
to see the price breaking lower to gain more conviction and increase the
bearish bets into the 1.34 handle.
USDCAD
Technical Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour
chart, we can see that in case we get a bigger correction from the support, the
sellers will have a good risk to reward setup around the 1.37 handle where
there’s the confluence of the downward trendline and the 61.8% Fibonacci
retracement level.
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 cycle highs.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour
chart, we can see that we have an important level at 1.3642 where the price got
rejected from several times. A breakout to the upside should see the buyers
increase the bullish bets into the downward trendline. Notice though that the
upside limit of the average
daily range today is around the 1.3666 level, so barring any big surprise
in the data, the pair is unlikely to extend above that level today.
Upcoming
Catalysts
Today we get the Canadian CPI report where the data is
unlikely to change much for the CAD although it could weigh or boost it in the
short-term. On Thursday, we will see the latest US PMIs and Jobless Claims figures.
Finally, on Friday, we conclude the week with the Canadian Retail Sales data.