USDCAD Technical Analysis – Key levels in play

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 NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• 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.
• There’s now basically a 50/50 chance of a rate cut
  in June.

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 missed
  expectations across the board although we saw an uptick 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

On the daily chart, we can see that USDCAD rejected
the key 1.3620 resistance last
Friday despite a strong US NFP report and weak Canadian jobs figures. The
sellers keep stepping in around these levels to position for a drop back into
the lower bound of the rising channel. The buyers will want to see the price
breaking higher to increase the bullish bets into the 1.38 handle.

USDCAD Technical Analysis –
4 hour Timeframe

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. There’s
not much else we can glean from this chart, so we need to zoom in to see some
more details.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
recent price action formed what looks like a descending
triangle with the 1.3575 support zone and the black trendline. The
price can break on either side of the pattern, but what follows next is
generally a strong push in the direction of the breakout. The buyers will want
to see the price breaking higher to position for a break above the key
resistance with a better risk to reward setup. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
lower bound of the channel.

Upcoming Events

Tomorrow we get the US CPI report, the BoC Rate
Decision and the FOMC Minutes. On Thursday, we will have the US PPI and the
latest US Jobless Claims figures. On Friday, we conclude the week with the
University of Michigan Consumer Sentiment Survey.