USD/CAD Technical Analysis – All Eyes on NFP | Forexlive
On the daily chart below, we can
see that the price has eventually broken out of the descending
triangle and it’s now struggling near the 1.37 handle. In fact, the price
started to range again, which is a common thing lately for this pair, and the
market is now awaiting key economic reports like NFP on Friday and CPI next
week, before deciding which way to go.
At the moment the market has
priced in a higher terminal rate for the Fed and the BoC is expected to pause
its tightening cycle this week. This policy divergence should be enough to
maintain the uptrend in the pair. If the US data comes out soft though, the
market may reprice interest rates expectations lower, and this would weigh on
the US Dollar pushing the pair lower.
On the 4 hour chart below, we can
see more closely the current ranging price action with the resistance at 1.3665. The buyers will start
to pile in once this level gets broken.
Today we have Fed
Chair Powell testimony and it’s expected that in case he sounds dovish
risk assets will rally pushing USD/CAD lower, while a more hawkish Powell
should weigh on risk sentiment and give the US Dollar strength. It’s a waiting
game now.
On the 1 hour chart below, we can
see that there’s really nothing to do here. Moving
averages are compressed and cross upwards and downwards many times as you would
expect in a ranging environment.
This is when traders generally
get chopped out as the noise and frequent ups and downs give false signals.
Patience is a big virtue for a trader and in such markets it’s what will
preserve the gains accrued when the market was trending.