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USD/CAD Price Analysis: Defend resistance-turned-support at 1.3650 ahead of Canadian employment data

  • USD/CAD is in some supply on Friday and is pressured by modest USD weakness.
  • Aggressively, Fed expectations and falling oil prices limit losses ahead of the Canadian employment report.
  • A convincing break below 1.3600 could change the bias in favor of the bears.

The pair USD/CAD comes under some selling pressure on Friday and reverses some of the previous day’s positive move to the 1.3700 area, or its highest level since late March. The pair, however, manages to bounce a few points from the daily low and trades around the 1.3665-1.3670 zone during the first half of the European session, with a drop of less than 0.15% on the day.

A modest pullback of the dollar from a six-month high, triggered by the decline in US Treasury yields, turns out to be a key factor putting some bearish pressure on the USD/CAD pair. That said, expectations that the Federal Reserve (Fed) will keep interest rates higher for longer should act as a tailwind for US bond yields and the USD. Apart from this, a softer tone around crude oil prices undermines the commodity-linked CAD and helps limit the pair’s decline. Traders also seem reluctant to place aggressive bets and prefer to wait for the release of the Canadian employment report, which will be released later in the North American session.

From a technical point of view, the intraday downtrend stops near the horizontal resistance of 1.3650, now converted into support. Any further decline is more likely to attract new buyers and remain capped near 1.3600. The latter should act as a key point, which if broken decisively should pave the way for a significant corrective decline. The USD/CAD pair could then accelerate its decline towards the next relevant support near the 1.3525 area en route to the key psychological level of 1.3500. Follow-through selling will expose the important 200-day SMA, currently around the 1.3460 area.

On the other hand, bulls could wait for the strength above 1.3700 to hold before making new bets. The subsequent bullish move could lift the USD/CAD pair towards the 1.3730 resistance zone on its way towards the round figure of 1.3800. The bullish trajectory could extend further and push spot prices to retest the year’s high, around the 1.3860 area touched in March.

USD/CAD Daily Chart


Technical levels to monitor


Last price today 1.3668
Today Daily Variation -0.0016
today’s daily variation -0.12
today’s daily opening 1.3684
daily SMA20 1.3559
daily SMA50 1,338
daily SMA100 1.3404
daily SMA200 1.3466
previous daily high 1.3694
previous daily low 1.3632
Previous Weekly High 1.3637
previous weekly low 1.3489
Previous Monthly High 1,364
Previous monthly minimum 1.3184
Fibonacci daily 38.2 1.3671
Fibonacci 61.8% daily 1.3656
Daily Pivot Point S1 1.3646
Daily Pivot Point S2 1.3608
Daily Pivot Point S3 1.3584
Daily Pivot Point R1 1.3709
Daily Pivot Point R2 1.3733
Daily Pivot Point R3 1.3771

Source: Fx Street

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