USD/CAD Price Analysis: Faces pressure around 1.3500 on subdued US Dollar

USD/CAD struggles to extend recovery above 1.3500 amid weak US Dollar.
Cooling US labor market conditions indicate that Fed rate cut bets for June remain on the table.
Slower Canada’s wage growth indicates that the inflation outlook is softening.

Sagar Dua FXStreet

The USD/CAD pair faces pressure while attempting to extend recovery above the psychological resistance of 1.3500 in the European session on Monday. The Loonie asset is expected to resume its downside journey as the broader appeal for the US Dollar remains weak due to firm market expectations for the Federal Reserve (Fed) reducing interest rates in the June policy meeting.

The United States Nonfarm Payrolls (NFP) report for February, released on Friday, indicated that the Unemployment Rate rose to 3.9%, highest in two years, though in a comfortable range and monthly wage growth was significantly slower. On the contrary, labor demand remains robust as employers hired 275K workers against expectations of 200K.

Going forward, the US Dollar will be guided by the Consumer Price Index (CPI) data for February, which will be published on Tuesday and will provide fresh insights into the interest rate outlook.

On the Canadian Dollar front, slower wage growth has softened the inflation outlook. Annual Average Hourly Earnings grew at a significantly slower pace of 4.9% in February from a 5.3% increase in January. This could allow Bank of Canada (BoC) policymakers to consider reducing interest rates ahead.

USD/CAD trades in a Rising Channel chart pattern on a daily timeframe. The chart formation exhibits an upside bias with moderate strength, and market participants consider each pullback a buying opportunity. Near-term demand remains downbeat as the Loonie asset is trading below the 20-day Exponential Moving Average (EMA), which trades around 1.3510.

The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among market participants.

Fresh upside would appear if the asset breaks above January 17 high at 1.3542, which will drive the asset towards February 13 high at 1.3586, followed by the round-level resistance of 1.3600.

On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.

USD/CAD daily chart

USD/CAD

Overview
Today last price	1.348
Today Daily Change	-0.0015
Today Daily Change %	-0.11
Today daily open	1.3495

Trends
Daily SMA20	1.352
Daily SMA50	1.3465
Daily SMA100	1.3531
Daily SMA200	1.3478

Levels
Previous Daily High	1.3498
Previous Daily Low	1.342
Previous Weekly High	1.3605
Previous Weekly Low	1.342
Previous Monthly High	1.3606
Previous Monthly Low	1.3366
Daily Fibonacci 38.2%	1.3468
Daily Fibonacci 61.8%	1.345
Daily Pivot Point S1	1.3444
Daily Pivot Point S2	1.3393
Daily Pivot Point S3	1.3366
Daily Pivot Point R1	1.3522
Daily Pivot Point R2	1.3549
Daily Pivot Point R3	1.36

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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