FundamentalOverview
The USD regained somestrength in latter part of last week. From the monetary policy perspective,nothing has changed as the market continues to expect at least two rate cuts bythe end of the year and sees some chances of a back-to-back cut in November.
The data continues tosuggest that the US economy remains resilient with inflation slowly fallingback to target. Overall, this should continue to support the soft-landingnarrative and be positive for risk sentiment. The new driver could be Trump nowlooking more and more like a potential winner and his policies are seen asinflationary which could see the Fed eventually going even more slowly on ratecuts.
The CAD, on the other hand,has been supported against the US Dollar in the past weeks mainly because ofthe risk-on sentiment, although that has changed last week. On the monetary policy front, the recent Canadian CPI sealed the rate cut at the upcomingmeeting as the data missed expectations across the board.
USDCADTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that USDCAD bounced from the key 1.36 support zone and extended the rally all the way backto the key resistance around the 1.3785 level.
This is where we can expectthe sellers to step in with a defined risk above the resistance to position fora drop back into the 1.36 support. The buyers, on the other hand, will want tosee the price breaking above the resistance to increase the bullish bets intothe 1.3860 level next.
USDCAD TechnicalAnalysis – 4 hour Timeframe
On the 1 hour chart, we canmore clearly the recent price action. There’s not much to do here other thanwaiting for the price to reach the key levels. The red lines define the average daily range for today.
UpcomingCatalysts
This week is pretty empty on the data front. We begin tomorrow with the BoCPolicy Decision and the US Flash PMIs. On Thursday, we will get the latest USJobless Claims figures. Finally, on Friday we conclude the week with the US PCEreport.
