FUNDAMENTAL
\nOVERVIEW<\/p>\n
USD:<\/p>\n
The US dollar skyrocketed
\nin the final part of last week as prospects of a quick end to the war faded and
\noil resumed the rally towards triple digit levels. Traders continue to price
\nout the rate cut bets amid surging energy prices. <\/p>\n
On Wednesday, we have the
\nFOMC policy decision where the central bank is expected to keep interest rates
\nunchanged with Miran, Waller and Bowman likely dissenting in favour of a rate
\ncut. At this meeting, we will also get the Summary of Economic Projections and
\nthe Dot Plot. <\/p>\n
The Fed is likely to revise
\ngrowth forecasts lower, while upgrading inflation estimates. The median Dot
\nPlot should remain unchanged with one rate cut expected by year-end. Overall,
\nthe central bank is likely to stress patience amid the US-Iran war but maintain
\nan easing bias. <\/p>\n
CAD:<\/p>\n
On the CAD side, the On Wednesday, we have the Bank Today, we get the Canadian USDCAD TECHNICAL USDCAD – daily<\/p>\n On the daily chart, we can USDCAD TECHNICAL USDCAD – 4 hour<\/p>\n On the 4 hour chart, we have USDCAD TECHNICAL USDCAD – 1 hour<\/p>\n On the 1 hour chart, we can UPCOMING CATALYSTS<\/p>\n
\neconomic data has been surprising to the downside, and last Friday we got a
\nvery weak jobs
\nreport<\/a>. In such a case, we would see traders pricing in rate cuts for the
\nBoC but given the US-Iran war and the surging energy prices, the market is
\nexpecting almost two rate hikes by the end of the year. <\/p>\n
\nof Canada policy decision where the central bank is expected to keep interest
\nrates unchanged amid the geopolitical uncertainty. The BoC might dismiss market-based
\ninterest rates expectations given the risks to growth though, which could weigh
\non the CAD.<\/p>\n
\nCPI report. As usual, the focus will be mainly on the Trimmed Mean CPI Y\/Y
\nwhich is expected at 2.3% vs 2.4% prior. The data might not change much for the
\nmarket given the focus on the US-Iran war.<\/p>\n
\nANALYSIS \u2013 DAILY TIMEFRAME<\/p>\n
\nsee that USDCAD<\/a> has
\nbeen trading in a wide range since February and the price recently surged all
\nthe way back to the resistance around the 1.3750 level. This is where we can
\nexpect the sellers to step in with a defined risk above the resistance to
\nposition for a drop back into the 1.3550 support. The buyers, on the other
\nhand, will look for a breakout to increase the bullish bets into the 1.39
\nhandle next.<\/p>\n
\nANALYSIS \u2013 4 HOUR TIMEFRAME<\/p>\n
\na mid-range support around the 1.3630 level. That should be the first target
\nfor the sellers. If the price gets there, we can expect the buyers to step in
\nwith a defined risk below the support to position for a rally back into the
\n1.3750 resistance next. <\/p>\n
\nANALYSIS \u2013 1 HOUR TIMEFRAME<\/p>\n
\nsee the price is breaking below the upward trendline that was defining the
\nbullish momentum on this timeframe. From a risk management perspective, the sellers
\nwould have a better risk to reward setup around the downward counter-trendline
\nto keep targeting the 1.3630 support. The buyers, on the other hand, will want
\nto see the price breaking above the counter-trendline to position for a
\nbreakout above the 1.3750 resistance next. The red lines define the average daily range<\/a> for today. <\/p>\n