The USDCAD is down-testing a key support target between 1.3207 and 1.32299. Looking at the daily chart below, that level was a ceiling in July and September 2022, then became a floor since breaking above also in September 2022. The level was retested in November 2022 and the swing low earlier this year in January 2023 moved close to the level but ran out of steam. The low price reached 1.3261 in January.
The low price in January was broken today, and the momentum has continued with the price reaching the 1.32299 level, but holding support against 1.3207 so far.
On a break below, it would open the door for further selling with the 50% midpoint of the move up from the 2021 low the next key target. That level comes in at 1.3132.
Conversely, if the buyers step in and hold support here, we could see a corrective move back toward the broken 38.2% retracement near 1.3331. A swing area between 1.3298 and 1.3320 is also near that level. That level should attract sellers on a rebound.
The Bank of Canada raised rates last week, and the Federal Reserve Rates unchanged but signaled the potential for further rate hikes to stem inflation. However, the initial jobless claims today showed weakness for the 2nd consecutive week and that has yields tilting back to the downside the two-year is down around 7 basis points on the day while the 10-year is currently down around 8 basis points. That has the US dollar moving lower including the USDCAD.