Fundamental
Overview
The USD continues to be
supported against most major currencies, especially the commodity currencies,
as the markets remain in a risk-off mood following some bad US data releases.
In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and this a weak US Consumer Confidence report on Tuesday.
The problem is that we’ve
also got inflation expectations jumping to new highs in both the UMich and the
Conference Board report. The market might be fearing that in case we get a
slowdown, the Fed might not be fast enough in cutting rates amid inflation
remaining above target and uncomfortably high long-term inflation expectations.
This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot. Today, we
get the US Jobless Claims figures and if we get a new high in the data, then we
can expect another wave of risk-off flows.
On the CAD side, the
economic data out of Canada has been showing gradual improvement and the
central bank is now past the peak in dovishness which should further support
the CAD. The risk-off sentiment though and the renewed threat of tariffs isn’t
helping the Loonie.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD broke above the key resistance around the 1.4280 level and
extended the rally as the buyers piled in with more conviction to target the 1.45
handle. The sellers will want to see the price falling back below the 1.4280
level to regain conviction and position for a drop into the 1.40 handle next.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the rally stalled around the most recent swing high at 1.4366 as the
sellers stepped in with a defined risk above the level to position for a
pullback into the 1.4280 level targeting a break below it. The buyers, on the
other hand, will want to see the price breaking above the 1.4366 level to
increase the bullish bets into the 1.45 handle next.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. The
buyers will likely continue to step in around the trendline to keep pushing
into new highs, while the sellers will likely pile in on the break to increase
the bearish bets into the 1.4280 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US PCE data.