On the daily chart below for USDCAD, we can see that the big rally we saw in the past weeks stalled at the 1.3664 resistance, and after a little conso
On the daily chart below for
USDCAD, we can see that the big rally we saw in the past weeks stalled at the
1.3664 resistance, and after a little
consolidation, it broke down and made a huge selloff back towards the low at
1.33. If we look at this timeframe, the pair has been stuck in a big range
since October 2022. This is mainly because there wasn’t a big policy divergence
between the Fed and the BoC, so both the currencies were strong.
Due to this fast fall, the price
is now overstretched as depicted by the distance from the blue short period moving
average. We can generally see a pullback or consolidation until the price and
the moving average converge. Lately, the USD has been weak due to the market
expecting the Fed to pause in June and start cutting rates before the end of
the year, but the recent economic data suggest that this is not yet a done
deal.
On the 4 hour chart below, we can
see that the price has bounced near the 1.33 handle and it looks like the
buyers are in charge for now. A break above the 1.34 handle should give the
buyers more conviction to extend the rally and possibly target the 1.3553
resistance. Tomorrow, we have the US CPI report and it’s likely that a
hot report will give the USD a boost sending the pair higher, while lower than
expected data should give the sellers control again and lead to pair to test
the major support at 1.3225.
On the 1
hour chart below, we can see that there was a divergence between the price and the MACD falling into the 1.33 handle. In
such instances, the price generally pulls back or reverses. Here we can see
that at the moment we have a pullback towards the 1.3390 swing high level. If
the buyers manage to break through that resistance, the next target will be the
38.2% Fibonacci
retracement level at 1.3440. For the sellers, on the other
hand, a break below the 1.3362 level should offer another fall towards the 1.33
handle.
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