USDCAD Technical Analysis – Playing the range | Forexlive

USD

The Fed left interest rates unchanged as expected at the last meeting with basically no
change to the statement. The Dot Plot still showed three rate cuts for 2024 and
the economic projections were upgraded with growth and inflation higher and the
unemployment rate lower.
Fed Chair Powell maintained a neutral stance as he said that it was
premature to react to the recent inflation data given possible bumps on the way
to their 2% target.
The US CPI and the US PPI beat expectations for the second
consecutive month.
The US Jobless Claims yesterday missed expectations slightly
although Continuing Claims improved.
The US ISM Manufacturing PMI beat expectations by a big margin with
the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
the lowest level in 4 years.
The US Consumer Confidence missed expectations although the labour
market details improved.
The market still expects the first cut in June but
the probability stands at just 60%.

CAD

The BoC left interest rates unchanged at
5.00% as expected at the last meeting stating that further easing in underlying
inflation is needed.
The latest Canadian CPI missed expectations across the
board with the underlying inflation measures falling.
On the labour market side, the latest report beat
expectations but we saw a fall in wage growth which is something that the BoC
is watching closely.
The Canadian Manufacturing PMI
improved slightly in March while the Services PMI weakened further. Both the
measures remain in contractionary territory.
The market expects the first rate
cut in June.

USDCAD Technical Analysis –
Daily Timeframe

USDCAD Daily

On the daily chart, we can see that USDCAD bounced yesterday
near the lower bound of the channel as we got a strong bid in the US Dollar
caused by risk off flows following the news of possible Israel-Iran conflict.
The buyers should now be looking again at the 1.3620 resistance
targeting a break above it. If the price gets there though, the sellers will
likely step in with a defined risk above the resistance to position for another
drop into the lower bound of the channel.

USDCAD Technical Analysis –
4 hour Timeframe

USDCAD 4 hour

On the 4 hour chart, we can see that the pair
remains stuck in the range between the 1.3450 support and the 1.3620 resistance,
although the pair continues to print higher lows indicating a bullish bias. With
the latest leg lower we can now draw a trendline
connecting the most recent swing highs and we can see that the price is
reacting to it as the sellers are probably stepping in to position for a drop
back into the lower bound of the channel targeting a break below it. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the resistance targeting a breakout.

USDCAD Technical Analysis –
1 hour Timeframe

USDCAD 1 hour

On the 1 hour chart, we can see that from
a risk management perspective, the buyers will have a much better risk to
reward setup around the 1.3540 level where we can find the confluence of the
most recent swing low, the red 21 moving average and
the 38.2% Fibonacci
retracement level. The sellers, on the other hand,
will want to see the price breaking lower to invalidate the bullish setup and
increase the bearish bets into the lower bound of the channel.