FundamentalOverview

The USD remains on thebackfoot as the support from the more hawkish repricing in interest ratesexpectations got exhausted a couple of weeks ago. The market is now in linewith the Fed’s baseline projection of two cuts in 2025 and we will likely needstrong US data to price out the remaining rate cuts and give the greenback aboost.

The data for now has beengood but not strong enough to make the market to price out the two cutsexpected by year-end. The next key data will be the prices paid component inthe ISM Services PMI tomorrow, the US Jobless Claims figures on Thursday, the NFPreport on Friday and the CPI next week.

On the CAD side, the underlyinginflation in Canada has been rising steadily since last December and morerecently we got muchhigher than expected numbers with the Trimmed Mean rate back above 3%.

That triggered a morehawkish repricing in interest rates expectations with the market now seeingjust one last rate cut in 2025. This week we have the BoC rate decision wherethe central bank is widely expected to hold rates steady.

USDCADTechnical Analysis – Daily Timeframe

On the daily chart, we can seethat USDCAD is rejecting once again the major upward trendlinearound the 1.37 handle. This is where the buyers continue to step in with a definedrisk below the trendline to position for a pullback into the downwardtrendline. The sellers, on the other hand, will want to see the price breakinglower to increase the bearish bets into the 1.35 handle next.

USDCAD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, there’snot much else we can glean from this timeframe but the first target for thebuyers should be the swing high at 1.3860. That would also be a nice spot forthe sellers to step in and position for the break below the major upwardtrendline with a better risk to reward setup.

USDCAD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor upward trendline defining the current bullish momentum.The buyers will likely continue to lean on it to keep pushing into new highs, whilethe sellers will look for a break lower to target a break below the major trendline.The red lines define the average daily range for today.

Upcoming Catalysts

Today, we get the US Job Openings data. Tomorrow, we havethe BoC rate decision, the US ADP and the US ISM Services PMI. On Thursday, weget the latest US Jobless Claims figures. On Friday, we conclude the week withthe Canadian Employment data and the US NFP report.