The US data has been consistently surprising to the upside since the last FOMC meeting, and this has led to a more hawkish pricing in interest rates expectations. Fed Chair Powell and other Fed members have also reiterated that two or more rate hikes can be appropriate if the data remains strong. On the other hand, the BoC is expected to keep rates unchanged as the last CPI report missed expectations and the central bank seemed already intentioned to skip another hike.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the break below the 1.3225 support turned into a fakeout as the market rallied back above the level and it’s now targeting the 1.3405 resistance. The moving averages have crossed to the upside and the price is printing higher highs and higher lows which indicate that the trend is now bullish. We might get a rejection near the 1.34 handle and a pullback into the 1.33 handle before another push to the upside.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the break above the trendline led to a rally above the 1.3225 level. The price then consolidated as the sellers started to fight hard the bullish momentum and we got a pullback into the 38.2% Fibonacci retracement level where the buyers piled in for the rally into the 1.34 resistance.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that USDCAD has been surging pretty hard in the last couple of days as the US data surprised to the upside. The sellers should lean on the 1.34 resistance with a defined risk above the level to target a pullback into the 1.33 support. The buyers, on the other hand, will want to see the price to break above the resistance to keep the momentum going and pile in for a rally into the 1.3550 level.
Upcoming Events
Today we have the US NFP report. Given the strong labour market data in the past days and weeks, the market expectations are skewed to the upside, so we will need to see a big beat or a miss to see a more sustained reaction after the release. A big beat should strengthen the USD and lead to the breakout of the 1.34 handle, while a big miss should weaken the greenback and offer the pullback into the 1.33 handle.
