Fundamental
Overview
The USD has been relatively
stronger against most major currencies since Friday as the markets went into
risk-off following some bad US data release. In fact, we got a weak US Flash Services PMI and soon after the long-term inflation expectations in the Final UMich Consumer
Sentiment survey jumped to a new 30-year high.
The risk-off sentiment
picked up after the jump in the long-term inflation expectations. The market
might be fearing that in case we get a slowdown, the Fed might not be fast
enough in cutting rates amid inflation remaining above target and uncomfortably
high long-term inflation expectations.
This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot.
On the CAD side, the
economic data out of Canada has been showing gradual improvement and the
central bank is now past the peak in dovishness which should further support
the CAD. The risk-off sentiment though and the renewed threat of tariffs isn’t
helping the Loonie.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD pulled back into the key resistance around the 1.4280 level. This is
where we can expect the sellers to step in with a defined risk above the
resistance to position for a drop into the 1.40 handle. The buyers, on the
other hand, will want to see the price breaking higher to target the 1.45
handle next.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, there’s
not much else we can add here as the sellers will look for a rejection, while
the buyers will look for a break. We need to zoom in to see some more details.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current pullback and
we also have a strong minor support around the 1.4240 level. If we get a
pullback into the trendline, we can expect the buyers to lean on it to position
for the break above the resistance. The sellers, on the other hand, will look
for a break below the trendline and the support to increase the bearish bets
into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Consumer Confidence
report. On Thursday, we get the latest US Jobless Claims figures, while on
Friday we conclude the week with the Canadian GDP and the US PCE data.