USD/CAD Outlook: Weak US and upbeat Canada’s jobs data inflate loonie

Slobodan Drvenica Windsor Brokers

USD/CAD

The loonie rallied against its US counterpart on disappointing US NFP (Dec 145K vs 164K f/c) and AHE (Dec m/m0.1% vs 0.3% f/c), also being boosted by upbeat Canada's jobs data (Employment change Dec 35.2K vs 25K f/c; unemployment Dec 5.6% vs 5.8% f/c/5.9% prev).
Fresh strength of the Canadian dollar was so far unable to make more significant extension, looking more like a consolidation of pair's strong rally in past three days then reversal.
However, daily chart shows the larger downtrend from 1.3320 (3 Dec high) intact, with 1.2915/1.3104 upleg seen as corrective phase that is likely to precede fresh push lower.
Thursday's daily candle with long upper shadow marks strong upside rejection at pivotal 1.3092 barrier (Fibo 38.2% of 1.3320/1.2951/20DMA) and possible formation of bull-trap pattern, which would be verified on extension and close below falling 10DMA (1.3022).
Weak momentum and MA's in bearish setup on daily chart support the scenario, with further negative signal expected on the second straight weekly close below broken 200WMA (1.3071).
Firm break below 10DMA would weaken near-term structure and risk test of pivotal supports at 1.3010/00 (Fibo 61.8% of 1.2951/1.3104/psychological support), which guard key support at 1.2951 (31 Dec low, the lowest since mid-Oct 2018).

Res: 1.3071; 1.3092; 1.3105; 1.3136
Sup: 1.3022; 1.3000; 1.2987; 1.2951

Interested in USD/CAD technicals? Check out the key levels

1. R3 1.3187
2. R2 1.3146
3. R1 1.3107
PP 1.3066
1. S1 1.3027
2. S2 1.2986
3. S3 1.2947

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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