USD/CAD Price Forecast: Defends 1.4000 ahead of US/Canadian employment details
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UPGRADE- USD/CAD regains positive traction as weaker Oil prices undermine the Loonie.
- The USD languishes near a multi-week low and acts as a headwind for the pair.
- Traders also seem reluctant ahead of the monthly US/Canadian jobs reports.
The USD/CAD pair attracts some dip-buying on Friday and reverses a part of the previous day's slide from the vicinity of the weekly top. US Crude Oil prices remain under some selling pressure for the third straight day amid worries about a potential supply glut and a slowdown in global demand, especially in China – the world's top importer. This, in turn, undermines the commodity-linked Loonie and supports the currency pair, though the upside potential seems limited ahead of the crucial monthly employment details from the US and Canada.
The Organization of the Petroleum Exporting Countries and its allies – known as OPEC+ – postponed planned supply increases by three months until April and extended the full unwinding of cuts by a year until the end of 2026. Moreover, geopolitical risk premium remains in play in the wake of the worsening Russia-Ukraine conflict and increasing tensions in the Middle East. This, along with signs of US economic resilience and hopes that US President-elect Donald Trump's expansionary policies will boost fuel demand, might act as a tailwind for Crude Oil prices.
Meanwhile, the US Dollar (USD) struggles to gain any meaningful traction and languishes near a multi-week low on the back of the recent decline in the US Treasury bond yields, which, in turn, should contribute to capping the USD/CAD pair. Moreover, the USD bulls might opt to wait on the sidelines ahead of the US Nonfarm Payrolls (NFP) report. The closely watched US jobs data should offer more cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will influence the near-term USD price dynamics and provide a fresh impetus to the pair.
Furthermore, speeches from a slew of influential FOMC members might infuse some volatility and produce some meaningful trading opportunities around the USD/CAD pair. This, to a larger extent, is more likely to overshadow Canadian jobs data, though a stronger report could further temper bets for a bigger rate cut by the Bank of Canada (BoC) in December. This could further hold back traders from placing aggressive bearish bets around the Canadian Dollar (CAD). Nevertheless, spot prices, at the current level, seem poised to register modest gains for the second straight week.
Technical Outlook
From a technical perspective, bullish oscillators on the daily chart support prospects for additional gains. That said, this week's repeated failures ahead of the 1.4100 mark warrant some caution for bullish traders. That said, a sustained strength beyond the said handle could lift the USD/CAD pair back to the multi-month top, around the 1.4175-1.4180 region touched in November. The momentum could extend further towards the 1.4200 round figure en route to the 1.4265 region and April 2020 swing high, around the 1.4300 neighborhood.
On the flip side, some follow-through selling and acceptance below the 1.4000 psychological mark could make the USD/CAD pair vulnerable to extending the recent pullback from a multi-year peak. Spot prices might then fall to the 1.3955 support en route to the 1.3925 region, or last week's swing low. This is followed by the 1.3900 mark, which if broken could drag spot prices to the November trough, around the 1.3820-1.3815 zone.
USD/CAD 4-hour chart
- USD/CAD regains positive traction as weaker Oil prices undermine the Loonie.
- The USD languishes near a multi-week low and acts as a headwind for the pair.
- Traders also seem reluctant ahead of the monthly US/Canadian jobs reports.
The USD/CAD pair attracts some dip-buying on Friday and reverses a part of the previous day's slide from the vicinity of the weekly top. US Crude Oil prices remain under some selling pressure for the third straight day amid worries about a potential supply glut and a slowdown in global demand, especially in China – the world's top importer. This, in turn, undermines the commodity-linked Loonie and supports the currency pair, though the upside potential seems limited ahead of the crucial monthly employment details from the US and Canada.
The Organization of the Petroleum Exporting Countries and its allies – known as OPEC+ – postponed planned supply increases by three months until April and extended the full unwinding of cuts by a year until the end of 2026. Moreover, geopolitical risk premium remains in play in the wake of the worsening Russia-Ukraine conflict and increasing tensions in the Middle East. This, along with signs of US economic resilience and hopes that US President-elect Donald Trump's expansionary policies will boost fuel demand, might act as a tailwind for Crude Oil prices.
Meanwhile, the US Dollar (USD) struggles to gain any meaningful traction and languishes near a multi-week low on the back of the recent decline in the US Treasury bond yields, which, in turn, should contribute to capping the USD/CAD pair. Moreover, the USD bulls might opt to wait on the sidelines ahead of the US Nonfarm Payrolls (NFP) report. The closely watched US jobs data should offer more cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will influence the near-term USD price dynamics and provide a fresh impetus to the pair.
Furthermore, speeches from a slew of influential FOMC members might infuse some volatility and produce some meaningful trading opportunities around the USD/CAD pair. This, to a larger extent, is more likely to overshadow Canadian jobs data, though a stronger report could further temper bets for a bigger rate cut by the Bank of Canada (BoC) in December. This could further hold back traders from placing aggressive bearish bets around the Canadian Dollar (CAD). Nevertheless, spot prices, at the current level, seem poised to register modest gains for the second straight week.
Technical Outlook
From a technical perspective, bullish oscillators on the daily chart support prospects for additional gains. That said, this week's repeated failures ahead of the 1.4100 mark warrant some caution for bullish traders. That said, a sustained strength beyond the said handle could lift the USD/CAD pair back to the multi-month top, around the 1.4175-1.4180 region touched in November. The momentum could extend further towards the 1.4200 round figure en route to the 1.4265 region and April 2020 swing high, around the 1.4300 neighborhood.
On the flip side, some follow-through selling and acceptance below the 1.4000 psychological mark could make the USD/CAD pair vulnerable to extending the recent pullback from a multi-year peak. Spot prices might then fall to the 1.3955 support en route to the 1.3925 region, or last week's swing low. This is followed by the 1.3900 mark, which if broken could drag spot prices to the November trough, around the 1.3820-1.3815 zone.
USD/CAD 4-hour chart
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