USD/CAD Price Analysis: Bulls rejected by the 100-day SMA following US NFPs

USD/CAD reversed its course during the American session and got rejected by the 100-day SMA, falling to near 1.3335.
NFPs showed that job creation in July cooled down while wages increased.
Canada reported soft labour market and economic activity figures.

Patricio Martín FXStreet

On Friday, the USD/CAD cleared daily gains and fell into negative territory as investors dumped the USD following Nonfarm Payrolls, which revealed that job creation cooled down in July. Canada also reported weak labour market data, so the factor driving the pair downwards was mainly the broad USD weakness from lower US yields.

The latest Nonfarm Payrolls report for the US presented a mix of data, painting a complex picture of the labour market. In July, the headline indicated the creation of 187,000 jobs, which fell short of the anticipated 200,000 but still exceeded the revised figure of 185,000 from previous reports. On the positive side, the Average Hourly Earnings experienced a 0.4% increase in the same month, surpassing expectations. Additionally, the yearly figure for Average Hourly Earnings rose to 4.4%.

Overall, the American labour markets flashed mixed signals during the week, but appeared to remain unbalanced while the economic activity remained resilient. This means that the Federal Reserve (Fed) may consider hiking at least one more time in the remainder of the year. Investors have opted to ignore rising wages as US yields decreased. The 2-year yield decreased by more than 1% to 4.80%, while the 5-year rate lead the decline, falling by more than 2% to 4.19%. The 10-year rate also weakened and fell to 4.11%, a sharp decline.

On the Canadian side, labour market data came in soft. In July, the number of employed people contracted by 6,400 while markets expected 21,100 newly employed workers while the unemployment rate remained steady at 5.5% YoY. Other data showed that the Ivey PMI released by the Richard Ivey School of Business, which captures business conditions in Canada, came in at 48.6 vs the 52.7 expected.

USD/CAD Levels to watch

The daily chart shows signs of bullish exhaustion for USD/CAD. The technical outlook appears neutral to bearish, with the Relative Strength Index (RSI) displaying a negative slope but staying above its midline and the Moving Average Convergence Divergence (MACD) showing fading green bars. Moreover, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, indicating that the bulls aren't done yet and that the outlook still favors buyers.

Resistance levels: 1.3400 (100-day SMA), 1.3454 (200-day SMA), 1.3500.
Support levels: 1.3280, 1.3250, 1.3240.

USD/CAD Daily chart

USD/CAD

Overview
Today last price	1.3328
Today Daily Change	-0.0025
Today Daily Change %	-0.19
Today daily open	1.3353

Trends
Daily SMA20	1.3221
Daily SMA50	1.3284
Daily SMA100	1.3406
Daily SMA200	1.3457

Levels
Previous Daily High	1.3378
Previous Daily Low	1.3329
Previous Weekly High	1.3255
Previous Weekly Low	1.3147
Previous Monthly High	1.3387
Previous Monthly Low	1.3093
Daily Fibonacci 38.2%	1.3359
Daily Fibonacci 61.8%	1.3348
Daily Pivot Point S1	1.3329
Daily Pivot Point S2	1.3304
Daily Pivot Point S3	1.328
Daily Pivot Point R1	1.3378
Daily Pivot Point R2	1.3403
Daily Pivot Point R3	1.3427

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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