On the daily chart below, we can see that the price has eventually broken out of the descending triangle and it’s now struggling near the 1.37 handle. In fact, the price started to range again, which is a common thing lately for this pair, and the market is now awaiting key economic reports like NFP on Friday and CPI next week, before deciding which way to go.
At the moment the market has priced in a higher terminal rate for the Fed and the BoC is expected to pause its tightening cycle this week. This policy divergence should be enough to maintain the uptrend in the pair. If the US data comes out soft though, the market may reprice interest rates expectations lower, and this would weigh on the US Dollar pushing the pair lower.
On the 4 hour chart below, we can see more closely the current ranging price action with the resistance at 1.3665. The buyers will start to pile in once this level gets broken.
Today we have Fed Chair Powell testimony and it’s expected that in case he sounds dovish risk assets will rally pushing USD/CAD lower, while a more hawkish Powell should weigh on risk sentiment and give the US Dollar strength. It’s a waiting game now.
On the 1 hour chart below, we can see that there’s really nothing to do here. Moving averages are compressed and cross upwards and downwards many times as you would expect in a ranging environment.
This is when traders generally get chopped out as the noise and frequent ups and downs give false signals. Patience is a big virtue for a trader and in such markets it’s what will preserve the gains accrued when the market was trending.
