USDCAD Technical Analysis – Waiting for the breakout

Basic overview

The dollar rose slightly this week after Fed Chairman Jerome Powell reiterated that 50 basis points of easing by the end of the year remains the base case. As a result, the market probability that the Fed will cut rates by 50 basis points in November has fallen from 51% to 40%.

On the data front, the ISM Manufacturing PMI released yesterday was slightly below expectations. On the bright side, the new orders index improved slightly, which could be an early sign of better conditions ahead. In contrast, the employment component contracted further but remained above the cyclical low.

On the Canadian side, the latest Canadian consumer price index was weak as Bank of Canada’s Macklem signaled the possibility of deeper cuts in case growth and inflation slowed more than expected. , raising the possibility of a 50bps cut at the next meeting. The market diminished that possibility after last week’s surprisingly strong Canadian retail sales and GDP report.

USDCAD Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDCAD is currently trading in a range between 1.36 resistance and 1.34 support. Market participants will likely continue trading in a range, buying at support and selling at resistance, until a breakout occurs.

USDCAD Technical Analysis – 4 Hour Timeframe

On the 4-hour chart, we can see that yesterday the price broke below the support zone around the 1.3490 level. Sellers are expected to rally around these levels in preparation for a fall to the support at 1.34, while buyers will be looking for a bounce back to the resistance at 1.36 as the price rebounds above recent support. Probably.

USDCAD Technical Analysis – 1 hour timeframe

On the hourly chart, sellers will look to extend the downside to the next support at 1.3460, while buyers will either buy a dip near the 1.3460 level or wait for a bounce to the upside, so we have nothing to add here. Not much else. 1.3490 level to target resistance at 1.36. The red line defines today’s average daily width.

Future catalyst

Today we will get the US ADP report. Tomorrow, the latest US unemployment insurance claims and US ISM services PMI will be released. Finally, we conclude the week with the US NFP report on Friday.