Baxia Markets
January 02, 2024

USDCAD Enters Consolidation Phase: Awaiting Macro Catalysts

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In the realm of forex, USDCAD finds itself within a consolidative phase, characterized by a 90-pip range between 1.3264 and 1.3177. Traders, adopting a cautious stance, are inclined to await key macroeconomic releases, setting the tone for the month ahead.


The upcoming week unfolds with a flurry of pivotal US economic indicators, including the ISM Manufacturing PMI, JOLTS Job Openings, ADP report, and the highly anticipated NFP on Friday. The FOMC minutes release on Wednesday adds an additional layer of complexity, offering insights into the potential timing of the first rate cut and influencing market sentiment.

USDCAD Enters Consolidation Phase: Awaiting Macro Catalysts

A detailed examination of the 1-hour timeframe chart reveals the convergence of EMA 50 towards EMA 200, indicative of a weakening bearish trend. This signals a short-term bullish tilt, raising the potential for a bullish trend reversal. Key resistance levels at 1.3268 and EMA 200 serve as crucial points to monitor, with a breakthrough offering early signals of a bullish momentum shift.


The volume profile indicator unveils a nuanced narrative as prices hover near the upper echelon of the value area, delineated by pink horizontal lines. The lower edge of the value area at 1.3207 emerges as a key support level, with a breach potentially indicating a shift in market dynamics.


Turning attention to the MACD indicator, the bullish trend persists as both the histogram and signal line maintain positions above the pivotal 0 line. This alignment strengthens the case for a short-term bullish bias.


However, the RSI indicator introduces a note of caution, portraying a bearish stance. The break below the 40% level 18 trading sessions ago remains a notable event, with subsequent attempts to breach the 60% threshold proving challenging. A successful break above 60% could herald a reliable indicator of an impending trend reversal.


In summation, the long-term trend for USDCAD remains bearish, while the short-term outlook tilts towards a bullish bias. A definitive long-term trend reversal may materialize upon breaching key resistance levels, especially the EMA 200, coupled with a decisive move by the RSI above the 60% level. Traders are advised to navigate this nuanced landscape with a discerning eye, mindful of evolving macro uncertainties.


Key Economic Releases to Watch Today

USD, S&P Global US Manufacturing PMI (Dec)
Forecast 48.2 vs Previous 49.4

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