Fundamental factors will bring USDCAD out of uncertainty

The dollar has been rising steadily for several weeks due to hopes for a resolution of the U.S. debt ceiling issue. Fading expectations of a Fed rate cut before the end of the year also contribute to the strengthening of the dollar.

Earlier, Fed Chairman Jerome Powell announced a likely pause in the cycle of monetary policy tightening. However, other representatives of the regulator were more hawkish. This made markets review their forecasts and dismiss hopes of a rate cut by the end of the year. 

According to CME FedWatch, there is a 38% chance of another 25 basis point rate hike in June.

Federal Reserve (Fed) Chairman Jerome Powell will speak at an event today. If Powell's words fail to meet expectations of a rate cut, it will again have a positive effect on the dollar's value.

U.S. President Joe Biden and House Speaker Kevin McCarthy hope to reach an agreement on the debt ceiling after Biden returns from Sunday's G7 meeting in Japan.

Markets expect a positive result from the debt ceiling talks, as recent comments suggest progress.

Canada's Core Retail Sales Index is published today at 12:30 am UTC. The index forecasts the fall to -0.8%, extending the deficit from the previous value of -0.7%. If the current reading of the Core Retail Sales Index is worse than expected, it could indicate a slowdown in economic activity in Canada, which would depress the value of the Canadian dollar in the short term.

The USDCAD is in a geometric triangle pattern on the H4 timeframe, which indicates uncertainty.

The publication of today's macro statistics may lead the pair out of the figure, and the speech of the Fed Chairman will show the way forward.

As for wave analysis, the price forms the third ascending wave. Breakout of the top of the first wave at 1.3565 will increase the price movement toward the upside.

Signal:

Short-term prospects for USDCAD are buying.

Target is at the level of 1.3640.

Part of the profit should be fixed around the level of 1.3565.

Stop-loss is around the level of 1.3370.

The bullish trend is short-term, so choose a trading volume of no more than 2% of your balance.