Over the past week, many central
bank speakers have shared their perspectives. The prevailing consensus remains
unchanged: a wait-and-see approach is favoured to gauge the necessity of
further tightening. While the majority of the FOMC expects two additional rate
hikes this year, they consistently highlight that such decisions are subject to
the data. The latest data from last week leans towards a hike though as the housing market indicators surprised to the upside, the US Jobless Claims remained pretty stable, and the US Services PMI beat forecasts.
Naturally, the upcoming
release of the NFP and CPI reports will have a pivotal role in shaping future
actions but as long as we keep seeing positive data, it is likely that the
market’s current expectation of a rate increase by the Fed in July will be
realized. On a different note, the BoC surprised with a rate hike at the last meeting citing
stubbornly high inflation with the market expecting another hike from the BoC
all else being equal.
USDCAD Technical Analysis –
Daily Timeframe
USDCAD Daily
On the daily chart, we can see that after breaking
below the key 1.3225 support, USDCAD
kept on falling with the 1.30 handle being the likely target for the sellers.
The trend has been really strong as the price couldn’t even probe above the
short-term blue 8 moving average. The
trend is clearly bearish, so it’s a tricky environment for the buyers. In fact,
they should have much more conviction if the price rises above the 1.3225 level
again.
USDCAD Technical Analysis –
4 hour Timeframe
USDCAD 4 hour
On the 4
hour chart, we can see that the price has been diverging with the
MACD for a
long time. This is generally a sign of a weakening momentum often followed by
pullbacks or reversals. In fact, USDCAD kept on pulling back into the trendline and
continuing its downtrend. We can expect the price to pull back again into the
trendline soon which will be another opportunity for the sellers to re-enter
the market or an opportunity for the buyers to ride a reversal in case the
price breaks above the trendline.
USDCAD Technical Analysis –
1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can see that the
last pullback got rejected at the 1.3225 support turned resistance and the
61.8% Fibonacci
retracement level. Today we have the Canadian CPI and
if we see a miss, we should see USDCAD rally towards the trendline and possibly
even higher. On the other hand, if we see a beat, we may see another push to
the downside.
This week is a
bit bare on the data front but today we have the Canadian CPI that may have a
big impact on the pair depending on the outcome. Later in the week we have the
US Jobless Claims on Thursday and the US PCE scheduled for Friday. We will also
hear again from many central bank members.