The market expects the Fed
to hike by 25 bps at the July meeting given that the economic data kept on
surprising to the upside since the last FOMC meeting, although a lot will
depend on the next NFP and CPI reports. Fed Chair Powell reiterated that they expect
two or more rate hikes if the economy performs as expected.
On a different note, the BoC
is likely to remain on hold at this meeting given the miss in the CPI report
although the disinflationary trend has slowed considerably, and they may opt
for a hawkish skip.
USDCAD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the sellers
leant on the red 21 moving average as shown
by the multiple wicks rejecting the moving average. This may have been just a
pullback and if we see a clear break to the downside below the 1.3225 level, we
may start to see more selling pressure and eventually a new lower low.
USDCAD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price has
been diverging with the
MACD falling
into and below the 1.3225 support. This is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The price broke above the trendline and the
1.3225 level which should signal a bigger pullback to the 1.34 handle, but the
price will need to break above the 1.33 resistance to confirm that. At the
moment, we’re seeing some consolidation near the 1.3225 level, so what happens
next will likely decide the direction.
USDCAD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
have a strong support zone at 1.3225 where we can also find a previous swing
high point and the 38.2% Fibonacci
retracement level. A break to the downside would see
the sellers pile in and target a new lower low. The buyers, on the other hand,
should step in here and target a new higher high.
Upcoming Events
Today it’s a holiday in
the US for Independence Day, so liquidity will be thinner. Nevertheless, in the
following days we will get major economic data releases like the US Jobless
Claims and ISM Services PMI on Thursday and the main release of the week: the
US NFP report on Friday.
This article was written by FL Contributors at www.forexlive.com. Source