On the daily chart below for USDCAD, we can
see that after reaching the top at 1.3862, the market fell as the failure of
the Silicon Valley Bank and the fears around the banking sector made the market
to reprice lower future interest rates expectations dragging the US Dollar down
with it.
The market then started to
consolidate at the 1.3664 support level where we have also the
38.2% Fibonacci
retracement level. This support zone held strongly but the
price is now threatening a breakout.
On the 4 hour chart below, we can
see how well this support zone held the several tries from the sellers of
breaking it. The recent selloff came after the hot US
PMIs data, which is odd since good data, especially after the banking
crisis, should be good for the US Dollar.
This may be just a squeeze on
dollar longs, but it’s hard to get a clear picture in today’s environment.
Nonetheless, the buyers should step in here to defend the level with a defined
risk below the zone. The sellers, on the other hand, will try to finally get
the breakout and in case they succeed, the next target should be the 1.35
handle.
On the 1
hour chart below, we can see that the price is losing some momentum right at
the support. The sellers may need a fundamental catalyst to get enough strength
to break lower. The moving
averages are crossed to the downside, so the trend on this timeframe is clearly
downwards. Conservative buyers may want to wait for the price to bounce from
this support and break above the trendline before piling in.