Fundamental Overview
The USD remains on the backfoot as the support from the more hawkish repricing in interest rates expectations got exhausted a couple of weeks ago. The market is now in line with the Fed’s baseline projection of two cuts in 2025 and we will likely need strong US data to price out the remaining rate cuts and give the greenback a boost.
The data for now has been good but not strong enough to make the market to price out the two cuts expected by year-end. The next key data will be the prices paid component in the ISM Services PMI tomorrow, the US Jobless Claims figures on Thursday, the NFP report on Friday and the CPI next week.
On the CAD side, the underlying inflation in Canada has been rising steadily since last December and more recently we got much higher than expected numbers with the Trimmed Mean rate back above 3%.
That triggered a more hawkish repricing in interest rates expectations with the market now seeing just one last rate cut in 2025. This week we have the BoC rate decision where the central bank is widely expected to hold rates steady.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD is rejecting once again the major upward trendline around the 1.37 handle. This is where the buyers continue to step in with a defined risk below the trendline to position for a pullback into the downward trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.35 handle next.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, there’s not much else we can glean from this timeframe but the first target for the buyers should be the swing high at 1.3860. That would also be a nice spot for the sellers to step in and position for the break below the major upward trendline with a better risk to reward setup.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. The buyers will likely continue to lean on it to keep pushing into new highs, while the sellers will look for a break lower to target a break below the major trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we get the US Job Openings data. Tomorrow, we have the BoC rate decision, 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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