USDCAD Technical Analysis – Key levels in play

<p>US:</p><ul><li>The Fed <a href="https://www.forexlive.com/centralbank/the-fomc-keeps-the-target-fed-funds-range-at-525-to-550-20230920/">left interest rates unchanged</a> as
expected.</li><li>The macroeconomic projections were revised higher
as the economy showed much stronger resilience than expected and the Dot Plot
showed that the majority of members still expects another rate hike by the end
of the year with less rate cuts in 2024.</li><li><a href="https://www.forexlive.com/centralbank/highlights-from-the-fed-chair-powells-press-conference-after-september-rate-decision-20230920/">Fed Chair Powell</a>
reaffirmed their data dependency but added that they will proceed carefully as
they are trying to find the optimal level of rates. Powell also added that the
soft landing is not the base case at the moment, although they are aiming for
it.</li><li>The latest <a href="https://www.forexlive.com/news/us-august-cpi-06-mm-versus-06-mm-expected-20230913/">US CPI</a> came
in line with expectations, so the market’s pricing remained roughly the same. </li><li>The <a href="https://www.forexlive.com/news/us-august-non-farm-payrolls-187k-vs-170k-expected-20230901/">labour market</a>
displayed signs of softening although it remains fairly solid as seen also
yesterday with the strong beat in <a href="https://www.forexlive.com/news/us-initial-jobless-claims-201k-versus-225k-estimate-20230921/">Jobless Claims</a>. </li><li>The market doesn’t expect the Fed to hike again at
the moment.</li></ul><p>Canada:</p><ul><li>The BoC <a href="https://www.forexlive.com/centralbank/bank-of-canada-holds-rates-at-500-as-expected-20230906/">left interest rates at 5.00%</a> as expected but remains prepared to
raise rates further if needed.</li><li>BoC Governor Macklem delivered a <a href="https://www.forexlive.com/centralbank/bocs-macklem-we-are-concerned-that-progress-in-bringing-down-inflation-has-slowed-20230907/">hawkish speech</a> which points to another rate hike
if the data remains strong into the next policy meeting. </li><li>The Canadian underlying inflation
data has been beating expectations month after month and this week we got <a href="https://www.forexlive.com/news/canada-august-cpi-40-versus-38-expected-20230919/">another beat</a> across the board. </li><li>On the labour market side, the recent
report showed another uptick in <a href="https://www.forexlive.com/news/canada-august-employment-399k-vs-150k-expected-20230908/">wage growth</a> and this is something that Governor
Macklem said the BoC is watching carefully.</li><li>The market now sees basically a
50/50 chance that the BoC hikes at the next meeting.</li></ul><p>USDCAD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that we got a
meaningful correction in USDCAD following strong economic data from Canada with
the wage growth increasing and the inflation data surprising to the upside. The
pair bounced on the key 1.34 <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">support</a> where we
had also the <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a> with the
50% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci retracement</a> level.
The price recently made a new lower low and the <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving averages</a> have
crossed to the downside which should be a signal that the trend has changed
from bullish to bearish. </p><p>USDCAD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the price has
pulled back into the previous <a href="https://www.forexlive.com/Education/technical-analysis-polarity-20220408/">support now turned resistance</a> at 1.35
where we can also find the 38.2% Fibonacci retracement level for confluence.
This is where the sellers are likely to pile in with a defined risk above the
high to target a break below the 1.34 handle. The buyers, on the other hand,
will want to see the price breaking above the 1.35 resistance to start
targeting the 1.3668 level again. On this timeframe, the trend is bullish as
the price broke above the <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a>, made a
new higher high and the moving averages have crossed to the upside.</p><p>USDCAD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that we
have a good support zone around the 1.3460 level, which might also be the
neckline of the possible <a href="https://www.forexlive.com/Education/chart-patterns-guide-20220125/">double bottom</a> on the
1.34 handle. We can also see that we have the confluence with the 50% Fibonacci
retracement level and the 4-hour 21 moving average. This is where the buyers
should pile in with a defined risk below the support to target the 1.3668
resistance. The sellers, on the other hand, will want to see the price breaking
below the support to invalidate the bearish setup and position for a break
below the 1.34 handle. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">Today</a> we have the
Canadian Retail Sales and the Flash PMIs for the US. </p>

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