The USD weakened across the board yesterday following a notable error in initial US claims data, which added further pressure on the USD as the market priced in the possibility that the labor market could recover. weaken quickly enough in the coming months to justify larger-than-expected rate cuts. expected. However, overall, price action was limited this week as the lack of key catalysts and the wait for the US CPI report kept the market at bay.
The CAD, on the other hand, was under pressure during the first part of the week, perhaps due to continued weakness in crude oil prices and growing expectations that the BoC would cut rates in June, although today’s jobs data and Canadian CPI The May 21 report will likely decide whether the BoC waits until July or makes a cut as early as June.
USDCAD Technical Analysis – Daily Timeline
USDCAD Daily
On the daily chart, we can see that USDCAD has rebounded from the key support area around the 1.36 handle, where we can also find the confluence with the trendline and the 61 Fibonacci retracement level .8%. A break below this support should allow sellers to gain conviction and increase bearish momentum towards new lows. Buyers, on the other hand, continue to intervene around these levels to position themselves for a return to cycle highs around the 1.39 handle.
USDCAD Technical Analysis – 1 Hour Timeframe
USDCAD 1 hour
On the hourly chart, we can see that the uptrend line was recently breached as sellers rallied to extend the decline to support at 1.36. From a risk management perspective, sellers will have better risk to reward a setup around the downtrend line where they will also find the confluence of the 38.2% Fibonacci retracement level and the 1 handle ,37.
Buyers, on the other hand, will want to see the price move higher to invalidate the bearish setup and position for a rally towards the 1.3785 level. The red lines marked on the chart define the pair’s average daily range, which is generally the maximum movement we can get on a given day, barring any major surprises in the market.
Upcoming catalysts
Today we wrap up the week with the Canadian Labor Market Report and Consumer Confidence Survey from Michigan State University. The overall weakness in Canadian employment data should increase the odds of a rate cut in June, although there is not much else to expect. In fact, the next big event to watch will be the US CPI next Wednesday, as it has a much bigger and lasting impact on the couple.
cnbctv18-forexlive
