Fundamental
Overview
The USD continues to be
backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although such
data keeps the interest rates expectations stable around two cuts by the end of
the year, it should also support the risk sentiment amid a pickup in growth.
This could be a headwind for the greenback.
This week the US Dollar has
been in the driving seat, although it looks like the price action is being
influenced more by month-end, quarter-end and half year-end flows rather than
something fundamental. We had also a key breakout in USDJPY yesterday and flows
there might have spilled over to other major pairs.
We got also the Canadian CPI figures this week which surprised
to the upside and trimmed rate cuts expectations for July with the market now
pricing a 65% chance of no change. That was not enough to break out of the
strong support zone around the 1.36 handle as it didn’t change much the bigger picture,
but it might keep the Loonie supported going forward once the quarter-end flows
fade out.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD bounced on the key support zone around the 1.36 handle. That’s where the
buyers continue to step in with a defined risk below the support to position
for a rally back into the 1.3785 resistance. The sellers will want to see the
price breaking lower to pile in more aggressively and target a drop into the
1.34 handle next.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the price yesterday broke above the 1.3680 resistance and pulled back
to retest it today. We can also see that we have the 38.2% Fibonacci
retracement level for confluence
there.
This is where the buyers
will likely step in with a defined risk below the level to target an extension
of the rally towards the 1.3785 resistance. The sellers, on the other hand,
will want to see the price falling back below the level to regain some control
and position for a break below the 1.36 support with a better risk to reward
setup.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we had also a downward trendline adding some extra confluence to the
1.3680 resistance. This breakout might give the buyers more conviction for a
rally back into the 1.3785 resistance next. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the Canadian GDP and the US PCE report.