USDCAD Technical Analysis – A look at the chart ahead of the Canadian CPI

Fundamental Overview

The US Dollar came under pressure last week following the US PPI report as the details that feed into the Core PCE index, which is what the Fed focuses on, were all very soft. That helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% in the prior month. That’s good news for the Fed.

The bearish momentum increased eventually as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the CAD side, it’s been all about the US Dollar softness and with the markets now less concerned about tariffs, the major currencies got the green light to appreciate against the greenback.

The economic data out of Canada has been showing gradual improvement and the central bank is now past the peak in dovishness which should further support the CAD. Today, we have the Canadian CPI and also the US-Russia talks in Saudi Arabia where positive headlines will likely be supportive for the risk sentiment and could weigh further on the dollar.

USDCAD Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDCAD last week finally broke below the key support around the 1.4280 level and extended the drop into new lows as the sellers piled in more aggressively. If we get a pullback into the support now turned resistance, we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 1.40 handle. The buyers, on the other hand, will want to see the price rising back above the resistance to start targeting the 1.45 handle next.

USDCAD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the recent price action with some consolidation near the recent lows as the market awaits new catalysts. There’s not much else we can glean from this timeframe so we need to zoom in to see some more details.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the current pullback. The buyers will continue to lean on it to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into the 1.40 handle next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US-Russia talks in Saudi Arabia and the Canadian CPI report. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US Flash PMIs.