USDCAD Technical Analysis – The price consolidates ahead of the US CPI

July 11, 2024 10:04 am

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 Daily

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 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 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.

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