USDCAD has been trending higher on its long-term time frames, with the recent selloff offering an opportunity to catch the uptrend. On the 4-hour time frame, an ascending trend line can be drawn to connect the recent lows of price action.
Using the Fib tool on the latest swing low and high on the 4-hour time frame shows that the 50% Fibonacci retracement level lines up with the trend line and the 1.4250 minor psychological level, which might hold as support for the pair. A larger correction to the 61.8% Fib near the 100 SMA might still be possible.
The 100 SMA is above the longer-term 200 SMA for now, confirming that the uptrend is likely to carry on. If so, USDCAD could make its way back up to the previous highs at 1.4680 once more.
Event risks for this setup include the top-tier releases from Canada today. These are the CPI and retail sales reports, which might provide more clues on whether the Canadian economy is doing well or not. Recall that BOC Governor Poloz refrained from cutting rates in their latest policy statement, citing that risks to their inflation outlook remain balanced.
Analysts expect the headline CPI to fall by 0.4% and the core CPI to show a 0.3% drop. Headline consumer spending is expected to show a 0.3% uptick while core retail sales could see a 0.4% gain.
As for the US, the flash manufacturing PMI and existing home sales data are up for release. Both reports are expected to show improvements but the risk-on flows that drove the dollar pairs yesterday might still be in play.