USDCAD Technical Analysis – We are trading in a tight range

Fundamental
Overview

The USD has been stronger
since last Friday as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best but
still pointing to strength. The jump in average hourly earnings caught the eye
but that might have been distorted by the drop in average weekly hours.

We’ve also got another jump
in inflation expectations in the University of Michigan Consumer
Sentiment survey
showing that the tariffs news is the main culprit of the recent surge in
expectations.

The focus now switched to
the US CPI report tomorrow where Core inflation is expected to tick lower which
would be a welcome news. A lower than expected print should see the US Dollar
losing ground across the board once again, while a hot reading might boost the
greenback for the rest of the week.

On the CAD side, the Canadian Employment report last Friday beat
expectations by a big margin once again as things are starting to slowly
improve for Canada. The Loonie has been held back only by the tariffs news as
they can impact negatively global growth on potential trade wars. When those fears
ease, the CAD gets the green light to appreciate.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD bounced from the key support around the 1.4280 level. The buyers stepped in
there to position for a rally back into the 1.4470 resistance next. The sellers
will want to see the price breaking below the key support to gain more
conviction and extend the drop into the 1.40 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a tight range between the 1.4280 support and the 1.4370
resistance. The sellers will likely step in around the resistance with a
defined risk above it to target a break below the support. The buyers, on the
other hand, will want to see the price breaking higher to increase the bullish
bets into the next resistance.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here as the sellers will look for a rejection around the
resistance, while the buyers will look for a break. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the Fed Chair Powell
Testimony. Tomorrow, we get the US CPI report. On Thursday, we have the US PPI
and the US Jobless Claims. On Friday, we conclude the week with the US Retail
Sales.