USDCAD Technical Analysis – Time for a pullback?

USD

CAD

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a less hawkish speech in
  the press conference compared to his previous remarks.
• The recent Canadian CPI missed expectations across the
  board and the underlying inflation measures eased, which was a welcome
  development for the BoC.
• On the labour market side, the latest report missed expectations
  across the board with negative figures in full-time employment and a slowing
  wage growth, which is going to be another positive outcome for the central
  bank.
• The market doesn’t expect the BoC to
  hike anymore.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD erased
almost entirely the selloff after the FOMC and the NFP report as the price is
now back near the 1.3862 resistance. This
might even turn into a “break and retest” pattern with the rejection from the
broken trendline making
it likely. The sellers should step in around these levels to target a drop into
the major trendline around the 1.3650 level.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers would be better off waiting for the price to
pull back into the swing support around the 1.3750 level where we can also find
the 50% Fibonacci retracement level
for confluence. The
sellers, on the other hand, will want to see the price breaking below the
support to increase the bearish bets into the 1.3650 level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
pair has been diverging with
the MACD trading
into the resistance. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, the target for the pullback
should be the 1.3750 support, while a break below it would confirm a reversal.

Upcoming Events

This week we have some top tier economic releases. We
begin today with the US CPI report which might be one of the most important
events of the week. Tomorrow, we have the US Retail Sales and PPI data, while
on Thursday we conclude with the latest US Jobless Claims figures.