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USDCAD Retreats from Local Lows

1/31/2023 11:38 AM

During the Asian session, the USD/CAD pair is growing moderately, developing the "bullish" momentum formed yesterday.

At the beginning of the week, quotes retreated from local lows of November 16 amid investors waiting for the outcome of the US Federal Reserve meeting on Wednesday: experts predict an increase in interest rates by only 25.0 basis points to 4.5%, which can be perceived as another step towards completing the current cycle of monetary tightening. At the same time, many analysts warn against jumping to conclusions, pointing out that the rhetoric of the head of the regulator, Jerome Powell, may again turn out to be "hawkish." Experts agree that the indicator is unlikely to exceed the psychological threshold of 5.0% this year significantly, and a slight correction is not ruled out towards the end of the year.

On Friday, the January report on the US labor market will be published: forecasts suggest a slowdown in the growth of new jobs outside the agricultural sector from 223.0K to 185.0K, while the unemployment rate may rise from 3.5% to 3.6%, and the average hourly wage assumes an increase of 0.3% to 4.9%.

Canada will not publish its report on the labor market this week, and the most interesting data will be business activity indices from S&P Global, as well as November statistics on the dynamics of gross domestic product (GDP), which is expected at 0.0% after rising by 0.1% in October.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range changes slightly, remaining quite spacious for the current market activity level. The MACD indicator is growing, keeping a relatively strong buy signal (the histogram is above the signal line). Stochastic maintains a strong upward direction but is rapidly approaching its highs, indicating the risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 1.3450, 1.3500, 1.3550, 1.3600. | Support levels: 1.3400, 1.3350, 1.3300, 1.3250.

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