USDCAD Technical Analysis – Watch out for a break of the key resistance

USD

• The Fed left interest rates unchanged as
  expected 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.
• Fed Chair Powell
  maintained a neutral stance as he said that it was premature to react to the
  recent inflation data given possible bumps on the way to their 2% target.
• The US CPI and
  the US PPI beat
  expectations for the second consecutive month.
• The US Jobless Claims beat
  expectations across the board.
• The latest US Manufacturing
  PMI
  beat expectations while the Services PMI missed slightly. Both the measures
  remain in expansion though.
• The market expects the first rate cut in June.

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 fall in wage growth which is something that the BoC
  is watching closely.
• 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 managed
to reach the key 1.3620 level where the sellers stepped in with a defined risk
above the level to position for a drop into the 1.3360 level. We got a strong
push lower following the Fed decision, but the move got erased almost entirely
the day after with the price now coming back to the 1.3620 level. The buyers
will want to see the price breaking that level to increase the bullish bets
into the 1.38 handle.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair is
now stuck in a range between the 1.3620 resistance and the
1.3450 support. Market participants will likely “play the range” by selling at
resistance and buying at support until we get a breakout supported by a
fundamental catalyst. There’s not much else we can glean from this timeframe,
so we need to zoom in to see some more details.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor trendline
defining the current uptrend with the confluence of the
red 21 moving average. If we
get a pullback into the trendline, we can expect the buyers to step in with a
defined risk below it to position for a rally into the resistance with a better
risk to reward setup. The sellers, on the other hand, will want to see the
price breaking lower to invalidate the bullish setup and increase the bearish
bets into the support.

Upcoming Events

Today we conclude the week with the Canadian Retail
Sales data.

This article was written by FL Contributors at www.forexlive.com.