USDCAD Technical Analysis – Key levels to watch for a pullback

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

CAD

• The BoC left interest rates unchanged at
  5.00% as expected changing a line in the statement that indicated less concern
  about inflation and thus the possibility of a cut in June if the trend remains
  intact.
• The latest Canadian CPI came in line with expectations although
  the underlying inflation measures eased further.
• On the labour market side, the latest report missed
  expectations across the board although we saw an uptick in wage growth which is
  something that the BoC is watching closely.
• The Canadian Manufacturing PMI
  improved slightly in March while the Services PMI weakened further. Both the
  measures remain in contractionary territory.
• The market expects the first rate
  cut in June.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD pulled
back into the blue 8 moving average and
bounced as the buyers stepped in to position for a rally into new highs. From a
risk management perspective, the buyers will have a much better risk to reward
setup around the 38.2% Fibonacci retracement level
and even better around the 61.8% Fibonacci retracement level as they will also
find the confluence of the
previous resistance now turned support.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that besides the
38.2% Fibonacci retracement level, we can also find a trendline adding
confluence around the 1.37 handle. This is where we can expect the buyers to
step in with a defined risk below the trendline to position for a rally into
new highs. The sellers, on the other hand, will want to see the price breaking
lower to pile in and target a drop into the 61.8% Fibonacci retracement level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the price
has been diverging with
the MACD, which
is generally a sign of a weakening momentum often followed by pullbacks or
reversals. The price broke below the trendline support, so we have higher
chances to see a drop all the way down to the major trendline. We have a black
counter-trendline acting as resistance now, so if the price gets there, we can
expect the sellers to step in to position for a drop into the major trendline.
If the price were to break to the upside though, the buyers will likely pile in
to position for a rally into new highs.