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USD/CAD has broken above a key technical resistance!

How high can USD/CAD fly?

Before moving on, ICYMI, yesterday’s watchlist looked at AUD/USD’s Head and Shoulders pattern after Australia printed weak labor market data. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

BOC Gov. Macklem: “Still a long way from our inflation target, but recent developments have reinforced our confidence that inflation is coming down

Lowe: RBA needs to respond to inflation’s demand element with “further monetary policy,” need to make clear that “we were not done yet.”

NZ FinMin Grant Robertson: Cyclone Gabrielle affect inflation in the near term but there’s evidence that “we’ve peaked” in terms of inflation

Dollar reaches six-week high on rate hike forecasts

Germany’s producer prices decelerated from 21.6% to 17.8% y/y in January

January discounting pushes U.K. retail sales 0.5% m/m higher vs. 0.3% expected, -1.2% in December

Japan to launch pilot programme for issuing digital yen

Upcoming Potential Catalysts on the Forex Economic Calendar:

Eurozone’s current account data at 9:00 am GMT
Canada’s foreign securities purchases at 1:30 pm GMT
Canada’s factory gate and raw materials prices at 1:30 pm GMT
US CB leading index at 3:00 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart

USD/CAD 1-hour Forex Chart by TradingView

If you weren’t around during the U.S. session, know that the dollar found buyers after Uncle Sam’s PPI and initial jobless claims data supported the idea of the Fed raising its interest rates further and/or keeping them high this year.

Hawkish bets on USD was enough to push USD/CAD firmly above the 1.3475 zone that had served as resistance for at least a month.

How high can USD/CAD fly?

Both the U.S. and Canada only have lower-tier reports due in the next trading sessions so USD/CAD’s price action will likely take cues on overall risk and USD sentiment.

If markets focus on their hawkish Fed bets, or if they start to worry about the impact of high(er) interest rates on global growth, then USD/CAD could maintain its bullish momentum.

USD/CAD could revisit areas of interest like 1.3530 or even 1.3600.

But if European and U.S. session traders focus on better-than-expected data releases, or if they promote a risk-friendly trading environment, then USD/CAD may give up some of its intraweek gains.

USD/CAD could drop back to its 1.3475 broken resistance zone or go lower depending on the bearish momentum.