USDCAD TECHS: Corrective Cycle

• RES 4: 1.4111 High Apr 4
• RES 3: 1.4016 High May 12 and 13 and a key resistance 
• RES 2: 1.3920 High May 21 
• RES 1: 1.3806 50-day EMA 
• PRICE: 1.3654 @ 17:10 BST Jun 30
• SUP 1: 1.3618 Low Jun 26  
• SUP 2: 1.3540 Low Jun 16 and the bear trigger
• SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
• SUP 4: 1.3473 Low Oct 2 2024

USDCAD is trading below its recent highs. The primary downtrend remains intact and short-term gains between Jun 16 - 23 appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3806. 

The Dallas Fed's weekly economic index came in at 2.37% in the week ending June 21 (scaled to four-quarter GDP growth), a pickup from 2.01% the prior week. 

• That brought the 13-week moving average to 2.27%, which represents a slight uptick from 1.99% in Q1 2025 on the same basis.
• This is another high-frequency barometer that suggests that the trajectory of real GDP growth hasn't really shifted significantly in the last few months.
• Note this an approach that eyes Y/Y growth (if the entire quarter persists at 2.37%, activity for the quarter is expected to be recorded at 2.37% higher than the same quarter a year earlier), different from Q/Q SAAR growth, which measures and annualizes sequential quarterly growth (which the Atlanta Fed currently nowcasts for Q2 at 2.9%). Y/Y GDP in Q1 was 2.0%, vs -0.5% on a Q/Q SAAR basis.

• Treasuries look to finish near late Monday highs, curves bull flattening amid mildly cautious risk-on tone after Canada withdrew last Friday's plans to implement a digital tax on US tech companies, trade talks to resume with US, Hassett said.
• Tsy Sep'25 10Y trades +10 at 112-04 after the bell, key resistance above at 112-23 (High May 1), 2s10s -2.210at 50.476, 5s30s -1.630 at 98.714.
• Amid the renewed focus on rate differentials in FX, the bull flattening move for the US curve has helped the US dollar extend its most recent weakness, with the dollar index falling around 0.5% to fresh cycle lows (March 2022 levels).
• The moves come amid President Trump stepping up his criticism of Fed Chair Powell and his ‘entire board’ over the level of US interest rates. Notably, Goldman Sachs have also pulled forward their call for the next Fed cut to September.
• Also note: Morgan Stanley strategists suggest buying SFRZ5 futures ahead of tomorrow's May Jolts and Thursday's June Non-Farm Payrolls release that may underpin rate cut projections that are over halfway between 50bp to 75bp in rate cuts by year end. "Downside risks to US labor market data remain underpriced, especially considering the potential for near 0k payroll prints starting as soon as July," MS suggested in a recent strategy piece.
• Stocks extended late Monday session highs - either caution to the wind ahead of a heavy data (shortened) week (markets are closed for the Independence Day holiday Friday, which draws the June employment release one day forward). Or month-end tied buying as money managers reallocated funds.