USDCAD Technical Analysis – Trade uncertainty remains the main driver
Fundamental Overview . . The US CPI yesterday missed expectations across the board but the details that feed into the Core PCE were less encouraging with early estimates increasing.
FundamentalOverview
The US CPI yesterday missed expectations across the boardbut the details that feed into the Core PCE were less encouraging with earlyestimates increasing. The price action in the USD has been mixed following thedata release as the markets are likely waiting for the US PPI today to getbetter estimates for the PCE.
On the CAD side, the BoC cut interest rates by 25 basis points to 2.75% asexpected amid concerns over weaker growth ahead due to the trade uncertaintyand US tariffs. The central bank emphasized a cautious approach to futuredecisions, balancing the upward pressure on inflation against the downwardpressure on weaker demand.
Governor Tiff Macklem acknowledged the economic uncertainty, and he warnedthat a prolonged trade war could slow GDP growth, weaken the job market, andpush inflation higher, creating a difficult policy environment. The market seesa 97% chance of another 25 bps cut at the upcoming meeting and a total of 53bps of easing by year-end.
USDCADTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that USDCAD continues to mostly range between the 1.42 and 1.45 levels asthe uncertainty around tariffs remains high. There’s not much we can glean fromthis timeframe, so we need to zoom in to see some more details.
USDCAD TechnicalAnalysis – 4 hour Timeframe
On the 4 hour chart, we cansee that the price dropped back to the key 1.4365 level which has been actingas kind of a barometer for the sentiment. This is where we can expect thebuyers to step in with a defined risk below the level to position for a rallyinto new highs. The sellers, on the other hand, will want to see the pricebreaking lower to increase the bearish bets into the 1.4245 level next.
USDCAD TechnicalAnalysis – 1 hour Timeframe
On the 1 hour chart, we cansee that we have a minor downward trendline defining the bearish momentum onthis timeframe. The sellers will likely lean on the trendline to keep pushinginto the 1.4245 level, while the buyers will look for a break higher toincrease the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US PPI data and the USJobless Claims figures. Tomorrow, we conclude the week with the University ofMichigan Consumer Sentiment report.
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