USDCAD, post BoC & PPI data release
Fundamental Analysis
Key points:
Despite expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair, selling of the US Dollar (USD) continues incessantly for the third consecutive day. In point of fact, the markets appear to be convinced that the US central bank will stop tightening its monetary policy after one more hike next month, as evidenced by the lower-than-expected US Producer Price Index (PPI) numbers released earlier today, Thursday 13th April 2023.
Technical Analysis
From a Technical Analysis standpoint, this is actually a follow-up from our initial bearish analysis that we shared on Friday 24 March (please see link at bottom of this analysis), since then price has been dropping (first top black arrow) from $1.38000 price level. Subsequently we shared another two updates on March 30th and April 3rd, explaining that we were anticipated a pullback and further drop from $1.35555 level (2nd lower black arrow), for more details, please feel free to go back and review those analysis. Since all that time our target was and still is the $1.31200 price zone as shown on weekly chart of the 30th March update.
So now, Price is coming to a zone from where it is likely to bounce off from and make another pullback, before moving down again. That pullback maybe deeper than expected, and we also don’t negate the fact that price may very well go through this level and if so that we should expect a bigger reaction from $1.33000 price level (see projections on chart). All in all, we believe USD/CAD is still bearish regardless if makes a pullback or creates some range in between.
Key points:
- For the fourth day in a row, USD/CAD has been under some selling pressure on Thursday.
- The USD is under pressure as a result of expectations for a pause in the Fed's rate-hike program.
Despite expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair, selling of the US Dollar (USD) continues incessantly for the third consecutive day. In point of fact, the markets appear to be convinced that the US central bank will stop tightening its monetary policy after one more hike next month, as evidenced by the lower-than-expected US Producer Price Index (PPI) numbers released earlier today, Thursday 13th April 2023.
Technical Analysis
From a Technical Analysis standpoint, this is actually a follow-up from our initial bearish analysis that we shared on Friday 24 March (please see link at bottom of this analysis), since then price has been dropping (first top black arrow) from $1.38000 price level. Subsequently we shared another two updates on March 30th and April 3rd, explaining that we were anticipated a pullback and further drop from $1.35555 level (2nd lower black arrow), for more details, please feel free to go back and review those analysis. Since all that time our target was and still is the $1.31200 price zone as shown on weekly chart of the 30th March update.
So now, Price is coming to a zone from where it is likely to bounce off from and make another pullback, before moving down again. That pullback maybe deeper than expected, and we also don’t negate the fact that price may very well go through this level and if so that we should expect a bigger reaction from $1.33000 price level (see projections on chart). All in all, we believe USD/CAD is still bearish regardless if makes a pullback or creates some range in between.
As per our initial up posted last week USD/CAD did reverse from the $1.33000 zone (blue area), with that bigger reaction we had mentioned. Yesterday the USD/CAD traded higher and closed the day in the positive territory near the price of $1.3455, putting now the price above the M50 in daily.
in Daily, we are looking at price to reach $1.35600 at minimum (just above grey line), but we think that price will very likely go up into the $1.36000 / $1.36500 zone (see 62/70.5% fib levels).
In H4, we believe that price will first pullback into the yesterday’s open price zone to further continue upwards, which will also be a retest of the Daily M50. Anyway, we will be watching this zone to potentially go long.