USDCAD Technical Analysis – Key levels to watch for a dip-buying opportunity

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 missed expectations across the
  board with the underlying inflation measures falling.
• 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 broke
through the key 1.3620 resistance following
another hot US CPI report and extended the rally into the 1.38 handle. The
price got a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. In this case, a pullback would also
coincide with the 38.2% Fibonacci retracement level
where the buyers will likely step in to position for a rally into a new cycle
high.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
minor trendline defining
the current upward momentum with the red 21 moving average adding some extra
support. The buyers will likely lean on the trendline to position for another
rally into new highs. The sellers, on the other hand, will want to see the
price breaking lower to position for a drop into the next trendline around the
1.3660 level where there will also be the 38.2% Fibonacci retracement level
adding extra support.

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. In this case, it could be a signal for a pullback into the minor
trendline where we can also find the 61.8% Fibonacci retracement level for confluence. A
break to the downside would confirm a reversal though and trigger a drop into
the base of the divergent formation around the 1.3660 level.

Upcoming Events

Today we will see the Canadian CPI, while on
Thursday we get the latest US Jobless Claims figures.