USDCAD Technical Analysis – The first breakout attempt fails

Fundamental
Overview

Yesterday, the USD
weakened across the board following a benign US
CPI report where the data came in line with expectations. The market firmed
up the rate cuts expectations with September and December now fully priced in. We
saw a general risk-on sentiment as a result and barring negative surprises in
the following days and weeks, this trend might have some more legs. Today’s US
jobless claims data don’t change the picture, on the contrary, they might
reaffirm the positive sentiment.

USDCAD Technical
Analysis – Daily Timeframe

On the daily
chart, we can see that USDCAD failed to sustain the breakout below the key support
zone around the 1.36 handle. This support has been a tough nut to crack, so the
sellers will want to see the price falling back below the zone to increase
their conviction and target a drop into the 1.34 handle next. The buyers, on
the other hand, will likely keep on piling in around these levels as they have
a defined risk to reward setup with the target standing around the cycle highs.

USDCAD
Technical Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that we have a downward trendline
defining the downtrend on this timeframe. The sellers might want to lean on the
trendline to position for a break below the support with a better risk to
reward setup. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into the cycle highs.

Upcoming
Catalysts

We don’t have
any other noteworthy catalyst for this week, so the markets will likely follow the
path of least resistance set by the US CPI report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.