USDCAD Technical Analysis – Watch what happens around this resistance

<p>USD</p><ul><li>The Fed <a href="https://www.forexlive.com/centralbank/federal-reserve-leaves-rates-unchanged-at-525-550-20240131/">left interest rates unchanged</a> as
expected while dropping the tightening bias in the statement but adding a
slight pushback against a March rate
cut.</li><li><a href="https://www.forexlive.com/centralbank/powell-qa-we-want-to-see-a-continuation-of-good-inflation-data-to-gain-confidence-20240131/">Fed Chair Powell</a> stressed
that they want to see more evidence of inflation falling back to target and
that a rate cut in March is not their base case. </li><li>The latest <a href="https://www.forexlive.com/news/us-q4-advance-gdp-33-vs-20-expected-20240125/">US GDP</a> beat
expectations by a big margin.</li><li>The <a href="https://www.forexlive.com/news/us-december-pce-core-inflation-29-yy-vs-30-expected-20240126/">US PCE</a> came
mostly in line with expectations with the Core 3-month and 6-month annualised
rates falling below the Fed’s 2% target. </li><li>The <a href="https://www.forexlive.com/news/us-january-non-farm-payrolls-353k-vs-180k-expected-20240202/">US NFP</a> report
beat expectations across the board by a big margin.</li><li>The <a href="https://www.forexlive.com/news/us-january-ism-manufacturing-491-vs-470-expected-20240201/">ISM Manufacturing
PMI</a>
surprised to the upside with the new orders index, which is considered a
leading indicator, jumping back into expansion. Similarly, the <a href="https://www.forexlive.com/news/ism-nonmanufacturing-pmi-for-january-534-versus-520-estimate-20240205/">ISM Services PMI</a> beat
expectations across the board with the employment sub-index erasing the prior
drop and prices paid jumping above 60. </li><li>The <a href="https://www.forexlive.com/news/us-january-consumer-confidence-1148-vs-1150-expected-20240130/">US Consumer
Confidence</a> report came in line with expectations but
the labour market details improved considerably.</li><li>The market now expects the first rate cut in May. </li></ul><p>CAD</p><ul><li>The BoC <a href="https://www.forexlive.com/centralbank/bank-of-canada-leaves-rates-unchanged-at-500-20240124/">left interest rates unchanged at
5.00%</a> as expected and dropped the language about being prepared to hike if
needed.</li><li>The latest <a href="https://www.forexlive.com/news/canada-december-cpi-34-yy-vs-34-expected-20240116/">Canadian CPI</a> beat expectations across the board with
the underlying inflation measures remaining elevated, which should give the BoC
a reason to wait for more data before considering rate cuts. </li><li>On the <a href="https://www.forexlive.com/news/canada-december-employment-01k-versus-135-k-estimate-20240105/">labour market</a> side, the latest report missed
expectations although wage growth spiked to the highest level since 2021.</li><li>The Canadian PMIs improved in
January although they remain both in contractionary territory. </li><li>The market expects the BoC to start
cutting rates in May.</li></ul><p>USDCAD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that USDCAD bounced
on the 50% <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">Fibonacci retracement</a> level
and rallied all the way up to the recent high following the strong US NFP
report. The sellers stepped in around the high with a defined risk above it to
position for a drop into new lows. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the next <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">resistance</a> at
1.3620. </p><p>USDCAD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have a better risk to reward setup
around the 1.3460 level where we can find the <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a> with the
50% Fibonacci retracement level and the 21 <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving average</a>. The
sellers, on the other hand, will want to see the price breaking below the
support zone to increase the bearish bets into the 1.3360 level. </p><p>USDCAD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that the
price is now right at the resistance. It will be interesting to see what
happens here in the US session as a break above the level should see the rally extending
to new highs while a strong rejection is likely to take us back to the 1.3460
level. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">This week</a> is basically empty on the data front with just
a couple of key economic releases on the agenda. On Thursday, we will see the
latest US Jobless Claims figures while on Friday we get the Canadian labour
market report. </p>

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