Fundamental Overview
The USD opened the week higher across the board as Trump followed through with his threats and imposed tariffs on Canada, Mexico and China on Saturday. Thankfully, it seems like Trump continues to use tariffs as a way to bring countries to the table and get some resolutions on his demands.
In fact, after some positive talks yesterday, the tariffs on Mexico and Canada have been paused for 30 days which brought some risk-on sentiment and weighed on the US Dollar. Today, Trump is expected to speak with Xi and positive news should weaken the greenback further.
On the CAD side, the focus has been entirely on the potential trade war with the US, so the data didn’t matter much. Nonetheless, the recent data from Canada has been pointing to gradual improvement after the aggressive rate cuts which would have likely seen the CAD getting stronger if it wasn’t for Trump’s tariffs threats.
Yesterday, we saw the Canadian Dollar rallying across the board as the positive talks between Trump and Trudeau led to a pause in tariffs for 30 days.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD opened the week with a huge gap and above the 2020 high. The sellers started to fade the move in expectations of some kind of a deal like we saw with Colombia and eventually that’s what happened as the tariffs got delayed after positive talks between Trump and Trudeau.
The sellers increased the bearish bets with the first target standing around the 1.43 handle. That’s where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs with a better risk to reward setup.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the entire gap got faded yesterday and the price is now trading back inside the old range between the 1.4470 resistance and the 1.4280 support. The sellers will likely continue to pile in around these levels with a defined risk above the resistance to target the support. The buyers, on the other hand, will want to see the price rising back above the resistance to position for new highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much we can add here but we can see that we have a good support zone around the 1.4390 level where the price got rejected from several times in the past weeks. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs, while the sellers will look for a break lower to increase the bearish bets into the next support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US Job Openings data and potentially a Trump-Xi call on tariffs. Tomorrow, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the Canadian Employment data and the US NFP report.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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