USDCAD attempts to reclaim 1.3500 level after hitting six-week lows at 1.3470

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  • The US dollar slumped 2.5% on Friday and hit a six-week low at 1.3470.
  • A mixed NFP report sends the dollar lower.
  • USDCAD is testing the neckline of a possible H&S formation.

The US dollar is about to close its worst daily performance in a few months with a sell-off of almost 1.8%. USDCAD has extended its reversal from Thursday’s high of 1.3800 to levels below 1.3500 for the first time since late September.

A mixed employment report has hit the US dollar

The US Non-Farm Payrolls report has shown an increase of 261,000 in October, beating expectations of 200,000, and September figures have been revised up to 315,000, from 4,000 previously estimated.

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The unemployment rate, however, has risen to 3.7% from 3.5% in September, above the 3.6% consensus, while hourly earnings rose to 4.7% in October from 5% in September. These figures suggest that labor market conditions may be softening, which has dampened expectations of further aggressive rate hikes by the Fed.

The US dollar, which had been rising since Wednesday after US Fed Chairman Jeremy Powell reiterated the need for further monetary tightening, fell like a stone on Friday on the first signs that the Fed’s monetary policy could be starting to have an effect.

USDCAD is testing support at 1.3500

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The daily chart shows the pair reaching the area where the neckline of a head and shoulders pattern formation meets the 50-day SMA at 1.3500.

A clear break of that area would trigger the H&S pattern, and could push the pair towards 1.3200 (1st and 7th Sep highs and 100-day SMA) and then probably the psychological level of 1.3000.

USDCAD daily chart

USDCAD daily chart

Technical levels to watch

USD/CAD

Overview
last price today 1.3509
Today I change daily -0.0237
Today Daily change % -1.72
Daily opening today 1.3746
Trends
daily SMA20 1.3707
daily SMA50 1.3486
daily SMA100 1.3201
daily SMA200 1.2958
levels
Previous daily high 1.3808
Previous Daily Low 1.3683
Previous Weekly High 1.3774
Previous Weekly Low 1.3496
Previous Monthly High 1.3978
Previous Monthly Low 1.3496
Daily Fibonacci of 38.2% 1,376
Daily Fibonacci of 61.8% 1.3731
Daily Pivot Point S1 1.3683
Daily Pivot Point S2 1,362
Daily Pivot Point S3 1.3557
Daily Pivot Point R1 1.3809
Daily Pivot Point R2 1.3871
Daily Pivot Point R3 1.3934

Source: Fx Street

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