Fundamental Overview

The USD weakened across the board last Friday following the soft US NFP report. The data showed some more labour market cooling with an increase in the unemployment rate and a decrease in wage growth. We basically have an economy that is slowing but still growing. The market seems to be taking it as good news as it still expects a soft landing.

The CAD, on the other hand, gained last week against the US Dollar mainly because of the risk-on sentiment as the US data continued to support at least two rate cuts from the Fed but didn’t send recessionary signals. For the CAD, the next big event will be the CPI report on July 16th. We saw another jump in wage growth in the latest labour market report, so the BoC will likely need good CPI figures to deliver a rate cut in July.

USDCAD Technical Analysis – Daily Timeframe

USDCAD Technical Analysis

On the daily chart, we can see that USDCAD is consolidating just above the key 1.36 support zone. That’s where the buyers keep on stepping in to position for a rally back into the 1.3785 resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the new lows with the 1.35 handle as the first target.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that we now have a minor range between 1.3600 and 1.3650 levels. There’s not much to do here and the market participants will likely keep on “playing the range” until we get a breakout.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see the recent rangebound price action as the lack of catalysts and the wait for the US CPI kept the market at bay. We will likely get a breakout today and the direction will be decided by the data. The red lines define the average daily range for today.

Upcoming Catalysts

Today is the most important day of the week as we get the US CPI and the US Jobless Claims figures. Tomorrow, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.