USD / CAD Levels to Advance Jobs, NFP Data

Canadian Dollar, USD / CAD, CAD Index, Jobs Report, Treasury Revenue – Analyst Choice

  • Canadian dollar looks at the report on local and neighboring jobs
  • USD / CAD remains stuck on range-bound price action
  • What are the levels to consider for broader trend developments?
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The Canadian dollar has recently been struggling to find new momentum against the anti-risk US dollar. A closer look reveals that despite recent consolidation, the broader upward trend in CAD remains intact. This is ahead of the key data this week that could boost volatility in both the Loonie and the Greenback. Job data is coming out of the US and Canada, which provides further clues about the pace of the economic recovery after Covid-19.

The chart below shows a majors-based Canadian dollar index, averaging its performance against the US dollar, Japanese yen, British pound and euro. Recently, prices bounced off long-term rising support from late March 2020. That has turned the focus back upward and could indicate near-term strength to get into CAD versus some of its fiat counterparts.

On Friday, the unemployment rate in Canada is expected to tap slightly higher, from 8.8% to 8.9% in January, as the country loses 42.9 thousand jobs. Meanwhile, in the US, the unemployment rate is expected to remain 6.7% for the same month, while adding 100,000 non-farm payrolls. Recent ADP data may outline a better-than-expected outcome, and perhaps open the door to adding further gains to longer-dated government bonds.

This could put the Loonie at risk for the Greenback if US employment is relatively stronger. That said, the impact on market sentiment along the way can also be important to keep an eye on. Rising stocks may benefit the growth-linked CAD at the expense of the USD. With that in mind, let’s take a look at the technical aspects to see how longer-term trends can unfold in the days and weeks ahead.

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Majors Based Canadian Dollar Index

Canadian Dollar Outlook: USD / CAD Levels to Anticipate Jobs, NFP Data

Chart created in TradingView

Canadian dollar technical analysis

USD / CAD appears to be consolidating between support (1.2590) and resistance (1.2957). At the same time, a falling resistance range from the end of March 2020 appears to keep the focus down. The pair is putting pressure on the latter, but a push above the trendline would still exit the 1.2906 – 1.2957 resistance zone thereafter. The 100 days are around the same area Simple moving average (SMA).

Clearing these technical boundaries may precede a major USD / CAD turning point that exposes tipping point 1.3102, followed by resistance at 1.3320 – 1.3421. On the other hand, resuming the dominant downward trend implies clearing the support zone of 1.2590 – 1.2630. That would then expose the April 2018 low as the pair targets the low reached in the same year at 1.2250.

With that in mind, these are some of the key technical boundaries to watch out for as key job data crosses the wires of the United States and Canada, with USD / CAD targeting range-bound price action.

look at the Finance Prop economic calendar for updates on these numbers

USD / CAD – Daily chart

Canadian Dollar Outlook: USD / CAD Levels to Anticipate Jobs, NFP Data

Chart created in TradingView

— Written by Daniel Dubrovsky, Currency Analyst for Finance

Use the comments below to contact Daniel @RTLnews on Twitter

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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