USDCAD Technical Analysis: Key Support Level in Focus

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US CPI missed
  expectations across the board bringing the expectations for rate cuts
  forward.
• The labour market is
  starting to show weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board, but yesterday the US Jobless Claims beat
  forecasts giving the USD a short-term boost.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin,
  followed by a disappointing ISM Services PMI,
  although the latter remained in expansion.
• The recent US Retail Sales beat
  expectations, while the US PPI missed
  forecasts by a big margin.
• The recent Fedspeak has been leaning on
  the hawkish side, but last week’s inflation report pretty much confirmed that
  the Fed might be done for the cycle.
• The market doesn’t
  expect the Fed to hike anymore.

CAD

• The BoC left interest rates at 5.00% as expected at the last meeting but
  remains prepared to raise rates further if needed.
• BoC Governor Macklem delivered a less hawkish speech in
  the press conference compared to his previous remarks.
• The recent Canadian CPI missed expectations across the
  board and the underlying inflation measures eased, which was a welcome
  development for the BoC.
• On the labour market side, the latest report missed expectations
  across the board with negative figures in full-time employment and slowing wage
  growth, which is going to be another positive outcome for the central bank.
• The market doesn’t expect the BoC to
  hike anymore.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD has
finally reached the key trendline around
the 1.3650 level. This is where we can expect the buyers to step in more
aggressively with a defined risk below the trendline to position for a rally
back into the highs and eyeing a break to the upside. The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into the 1.34 handle.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have some
key support and
resistance zones. The buyers should pile in at the support zone around the
1.3650 level with a defined risk below it. If we see a bounce, the sellers will
lean on the resistance zone around the 1.3750 level where we will also find the
downward trendline for confluence.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup around the major trendline and the support zone at
1.3650. A break below this zone should invalidate the bullish setup and
increase the bearish momentum into the 1.34 handle. On the other hand, a break
above the resistance zone and the trendline should increase the bullish
momentum as the buyers will add even more to their upside bets and the sellers
will likely fold.

Upcoming Events

Today the US will be on holiday for Thanksgiving Day
and therefore the liquidity in the market will be thinner. Tomorrow, we
conclude the week with the Canadian Retail Sales and the US PMIs.