USDCAD Technical Analysis – Getting close to a key support zone

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 Q1 GDP
  surprisingly missed expectations although the core components showed a strong
  economy, nonetheless. The Core PCE though surprised to the upside pushing rate
  cuts further away.
• 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 PMIs missed expectations in April with the
  commentary citing lower inflationary pressures but also increased layoffs.
• The market 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 is
getting closer and closer to the key support zone
around the 1.3620 level where we can also find the 61.8% Fibonacci retracement level
for confluence. That
will be the first opportunity for the buyers followed by the second one around
the major trendline if the
price were to break below the 1.3620 support. The sellers, on the other hand,
will keep pushing at every break lower, and in case they manage to break below
the trendline, the next target will be the 1.3225 low.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
yesterday got rejected from the minor downward trendline as the sellers stepped
in to increase the bearish bets into new lows. The buyers will need to break
above the minor trendline and the 1.3730 resistance zone to turn the trend
around and start targeting new highs.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor resistance zone around the 1.3665 level where there’s also the red
21 moving average for
confluence. This is where we can expect the sellers to step in again with a
defined risk above the resistance to increase the bearish bets into new lows.
The buyers, on the other hand, will want to see the price breaking higher to
position for a rally into the trendline and targeting a break above it.

Upcoming Events

Today we conclude the week with the US PCE report.