USDCAD Technical Analysis: Key levels to watch

US

• The Fed left interest rates unchanged as
  expected with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US Core PCE came
  in line with expectations.
• The labour market is
  starting to show some weakness as Continuing Claims
  yesterday showed another increase and the NFP data
  last Friday missed across the board.
• The US Consumer
  Confidence fell for the third consecutive month
  although the data beat expectations.
• The US ISM
  Manufacturing PMI last week missed expectations by a big
  margin, followed later on Friday with a disappointing ISM Services PMI,
  although the index remained in expansion.
• The market doesn’t expect the Fed to hike anymore.

Canada

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a less hawkish speech in
  the press conference compared to his previous remarks.
• The recent Canadian CPI missed expectations across the
  board and the underlying inflation measures eased, which was a welcome
  development for the BoC.
• On the labour market side, the latest report missed expectations
  across the board with negative figures in full-time employment and a slowing
  wage growth, which is going to be another positive outcome for the central
  bank.
• The market doesn’t expect the BoC to
  hike anymore.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD pair
reversed most of the losses seen after the less hawkish than expected FOMC and
the disappointing US labour market data. The price bounced on the 50% Fibonacci retracement level
and it’s now hovering around the broken trendline. This
might turn into a “break and retest” pattern, so the sellers are likely to step
in around these level to position for a drop into the major upward trendline.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a
strong resistance around
the 1.3730 level where there was the confluence with the
red 21 moving average and the
38.2% Fibonacci retracement level. The price managed to break decisively above
the resistance and the buyers increased the bullish bets into the highs. We
then got a pullback into the red 21 moving average where the buyers stepped in
once again as the bullish momentum remained intact.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price got rejected from the recent swing high at 1.3814. We should now have two
key short-term levels: the resistance at 1.3814 and the support at 1.3730. If
the price breaks to the upside, the buyers should continue to maintain control
and take the pair into new highs. On the other hand, if the price breaks below
the support, the sellers should pile in with more conviction and target the
major trendline around the 1.36 handle.

Upcoming Events

Today the only market moving event will be the
release of the University of Michigan Consumer Sentiment report.