USDCAD Technical Analysis – Time for a pullback?

USD

CAD

• The BoC left interest rates unchanged at
  5.00% as expected stating that further easing in underlying inflation is needed.
• The latest Canadian CPI missed expectations across the
  board with the underlying inflation measures falling.
• On the labour market side, the latest report beat
  expectations but we saw a contraction in full-time employment and a fall in
  wage growth.
• The Canadian PMIs improved in
  January although they remain both 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 broke
below the key trendline and
triggered a strong selloff as the sellers piled in to position for a drop into
the 1.3360 level. That’s also where we should find the buyers stepping in to
position for a rally back to the highs with a better risk to reward setup.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
clear swing level around at the 1.3442 level where we might see a bounce with
the buyers stepping in with a defined risk below the level to position for a
rally back to the highs. The sellers, on the other hand, might want to wait for
the price to pull back into the 38.2% Fibonacci retracement level to
position for new lows with a better risk to reward setup.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the latest
leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for a pullback into the resistance around
the 1.35 handle.

Upcoming Events

Today we conclude the week with the US NFP and the
Canadian Jobs data.