USDCAD Technical Analysis – Key Levels in Play

USD

• The Fed left interest rates unchanged as expected at the last meeting, with virtually no change in its statement. The Dot Plot showed three more rate cuts for 2024 and the economic projections were improved with higher growth and inflation and lower unemployment.
• Fed Chairman Powell maintained a neutral stance, saying it was premature to react to recent inflation data given possible obstacles on the path to their 2% target.
• The US CPI and PPI exceeded expectations for the second month in a row.
• U.S. NFP beat expectations across the board, although average hourly earnings were in line with forecasts.
• The US ISM Manufacturing PMI significantly beat expectations as the price component continued to rise, while the US ISM Services PMI missed expectations as the price index fell to a 4-year low .
• There is now a 50/50 chance of a rate cut in June.

GUJAT

• The Bank of Canada left interest rates unchanged at 5.00%, as expected at the last meeting, saying further easing of underlying inflation was needed.
• The latest Canadian CPI missed expectations across the board, with underlying inflation measures falling.
• On the labor market side, the latest report fell short of expectations across the board, although we did see a slight uptick in wage growth, a phenomenon the Bank of Canada is monitoring closely.
• The Canadian manufacturing PMI improved slightly in March, while the services PMI weakened further. Both measures remain in contraction territory.
• The market expects a first rate cut in June.

USDCAD Technical Analysis – Daily Timeline

On the daily chart, we can see that USDCAD rejected key resistance at 1.3620 last Friday despite a strong US NFP report and weak Canadian employment numbers. Sellers continue to intervene around these levels to position themselves for a return to the lower boundary of the ascending channel. Buyers will want to see the price move higher to increase bullish bets to 1.38.

USDCAD Technical Analysis – 4 Hour Timeframe

On the 4-hour chart, we can see that the pair remains stuck in the range between support at 1.3450 and resistance at 1.3620, although the pair continues to print higher lows, indicating a bias bullish. There’s not much else we can get from this graph, so we have to zoom in to see more detail.

USDCAD Technical Analysis – 1 Hour Timeframe

On the hourly chart, we can see that the recent price action has formed what looks like a descending triangle with the support area of ​​1.3575 and the black trendline. Price may break either side of the pattern, but what follows next is usually a strong push toward the breakout. Buyers will want to see the price move higher to position themselves above key resistance with a better risk/reward setup. Sellers, on the other hand, will want to see the price fall to increase bearish bets at the lower boundary of the channel.

Events to come

Tomorrow we will receive the US CPI report, the BoC rate decision and the FOMC minutes. On Thursday we will have the US PPI and the latest US jobless claims figures. On Friday, we wrap up the week with the University of Michigan Consumer Sentiment Survey.