USDCAD is testing the key support target between 1.3207 and 1.32299. Looking at the daily chart below, this level was the ceiling in July and September 2022, then since the break above it became the bottom in September 2022 as well. level but ran out of steam. The low price reached 1.3261 in January.

The January low was broken today and the momentum continued as the price reached the 1.32299 level, but has so far held support against 1.3207.

A break below would open the door to further selling with a 50% midpoint move up from the 2021 low, another key target. This level is at 1.3132.

Conversely, if buyers enter and hold support here, we could see a corrective move back towards the broken 38.2% retracement near 1.3331. The swing area between 1.3298 and 1.3320 is also close to this level. This level should attract sellers on the rebound.

The Bank of Canada raised rates last week and the Federal Reserve left rates unchanged, but signaled the potential for more rate hikes to stem inflation. However, initial jobless claims showed weakness for a second week in a row today, causing yields to tilt back to the downside, with the 2-year down 7 basis points on the day, while the 10-year is currently around 8 basis points lower. This results in the US dollar moving lower including the USDCAD.