- The bias is bullish despite temporary retreats.
- The BOC should bring high volatility later today.
- The upper median line (uml) represents a major target.
The USD/CAD price reached a new high of 1.3671 today, reflecting the strength of the US dollar. However, it has retraced slightly to 1.3648 at the time of writing.
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The outlook remains bullish for the pair, as the Dollar Index is also on an upward trend. The US dollar was supported by the better-than-expected US Factory Orders data yesterday, which showed a 2.1% decline instead of the forecasted 2.5%.
Today, the market will be influenced by several economic events from both countries. The Bank of Canada is expected to keep the Overnight Rate unchanged at 5.00%, but the BOC Rate Statement could provide some clues about the future monetary policy stance.
A hawkish tone from the BOC could boost the Canadian dollar in the short term. On the other hand, the US will release the ISM Services PMI, which is expected to drop slightly from 52.7 to 52.5.
This could weigh on the US dollar if it signals a slowdown in the service sector. Moreover, the trade balance figures from both countries could also have an impact on the exchange rate.
Tomorrow, there will be more data to watch out for. The US will publish the Unemployment Claims, which could indicate the state of the labor market.
Canada will report the Building Permits and Ivey PMI, which could reflect the health of the construction and business sectors. Additionally, the BOC Governor Macklem will speak at an event, which could offer some insights into his views on the economy and inflation.
USD/CAD price technical analysis: Broad bullish trend
The hourly chart shows that the pair has resumed its uptrend after bouncing off the median line (ml) of the ascending pitchfork. It has reached the historical resistance level of 1.3667, which could pose a challenge for the bulls.
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The upper median line (uml) is also a potential target for the pair. However, the market could be volatile due to the economic events of both countries.
A pullback to the 1.3600 psychological level could offer a new opportunity to buy. A breakout above 1.3667 could confirm the continuation of the uptrend.
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