USDCAD Technical Analysis – Awaiting a big breakout

<p>The miss in the <a href="https://www.forexlive.com/news/us-june-cpi-yy-30-versus-31-expected-20230712/">US CPI</a> report last week has led to a broad US Dollar
weakness as the market anticipated one last hike at the July FOMC meeting. The
falling inflation with a resilient labour market have also strengthened the
soft-landing narrative and caused a positive risk sentiment in the markets. This
week though, the higher than expected <a href="https://www.forexlive.com/news/usa-june-retail-sales-02-versus-05-expected-20230718/">Retail Sales</a> (Control Group) and the much better
than expected <a href="https://www.forexlive.com/news/us-initial-jobless-claims-228k-vs-242k-estimate-continuing-claims-1754m-vs-1729m-est-20230720/">US Initial Claims</a> gave the USD some support and the
weakness after the miss in the CPI was almost completely erased. </p><p>On the other hand, the BoC <a href="https://www.forexlive.com/centralbank/bank-of-canada-raises-rates-by-25-basis-points-to-50-20230712/">hiked rates by 25 bps</a> as expected as the central bank
doesn’t like the persistently high underlying inflation with a tight labour
market. In fact, the BoC Governor Macklem said that the Bank of Canada is
prepared to raise rates further as if they don’t do enough now, they will
likely have to do even more later. The recent <a href="https://www.forexlive.com/news/canada-june-cpi-28-yy-versus-30-expected-20230718/">Canadian underlying inflation</a> data beat expectations on all
measures. </p><p>USDCAD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that USDCAD has been
struggling to break through the 1.31 handle and kept on bouncing back into the
1.3225 resistance. We are
now consolidating here between the 1.31 support and 1.3225 resistance, so the
buyers and sellers will wait for a breakout on either side before stepping in. </p><p>USDCAD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the selloff
following the miss in the US CPI report got completely erased as the USDCAD
rallied back into the 1.3225 resistance after the breakout of the <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a>. We are
now in a rangebound market, so the best strategy would be to wait for a
breakout on either side before considering new positions. Once can also “play
the range” though by buying at support and selling at resistance. </p><p>USDCAD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that we
have a minor resistance level at 1.3195. We should see a quick move into the
1.3225 resistance if the level gets broken, but the next big move will depend
on what happens at the 1.3225 level. In fact, we are likely to find sellers
there with a defined risk above the level and target the break of the 1.31
support. If we see the price breaking higher though, the buyers should pile in
and extend the rally into the 1.33 resistance. </p>

This article was written by FL Contributors at www.forexlive.com.