February 04, 2025 at 11:02AM
Fundamental
Overview
The USD opened the week
higher across the board as Trump followed through with his threats and imposed tariffs on Canada, Mexico and China on
Saturday. Thankfully, it seems like Trump continues to use tariffs as a way to
bring countries to the table and get some resolutions on his demands.
In fact, after some
positive talks yesterday, the tariffs on Mexico and Canada have been paused for
30 days which brought some risk-on sentiment and weighed on the US Dollar.
Today, Trump is expected to speak with Xi and positive news should weaken the greenback
further.
On the CAD side, the focus
has been entirely on the potential trade war with the US, so the data didn’t
matter much. Nonetheless, the recent data from Canada has been pointing to
gradual improvement after the aggressive rate cuts which would have likely seen
the CAD getting stronger if it wasn’t for Trump’s tariffs threats.
Yesterday, we saw the
Canadian Dollar rallying across the board as the positive talks between Trump
and Trudeau led to a pause in tariffs for 30 days.
USDCAD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCAD opened the week with a huge gap and above the 2020 high. The
sellers started to fade the move in expectations of some kind of a deal like we
saw with Colombia and eventually that’s what happened as the tariffs got
delayed after positive talks between Trump and Trudeau.
The sellers increased the
bearish bets with the first target standing around the 1.43 handle. That’s
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into new highs with a better risk to reward setup.
USDCAD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the entire gap got faded yesterday and the price is now trading back
inside the old range between the 1.4470 resistance and the 1.4280 support. The sellers
will likely continue to pile in around these levels with a defined risk above
the resistance to target the support. The buyers, on the other hand, will want
to see the price rising back above the resistance to position for new highs.
USDCAD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much we can add here but we can see that we have a good support zone around
the 1.4390 level where the price got rejected from several times in the past
weeks. This is where we can expect the buyers to step in with a defined risk
below the level to position for a rally into new highs, while the sellers will
look for a break lower to increase the bearish bets into the next support. The
red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US Job Openings data and
potentially a Trump-Xi call on tariffs. Tomorrow, we have the US ADP and the US
ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On
Friday, we conclude the week with the Canadian Employment data and the US NFP
report.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
