USD/CAD Price Forecast: Hangs near weekly low, below 1.3500 ahead of US/Canadian jobs data

USD/CAD retests the weekly low on Friday and is pressured by a combination of factors.
Fed rate cut bets weighs on the USD, while an uptick in Oil prices underpins the Loonie.
The downside remains cushioned ahead of the monthly jobs data from the US and Canada.

Haresh Menghani FXStreet

The USD/CAD pair attracts sellers for the third straight day and remains depressed below the 1.3500 psychological mark, or the weekly low through the early European session on Friday.

The US Dollar (USD) selling bias remains unabated in the wake of bets for a larger interest rate cut by the Federal Reserve (Fed) in September. Apart from this, an uptick in Crude Oil prices is seen underpinning the commodity-linked Loonie and exerting downward pressure on the USD/CAD pair. The downside, however, seems limited as traders might opt to wait for the release of the crucial monthly employment details from the US and Canada, due later during the North American session.

From a technical perspective, the recent breakdown through the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have recovered from the oversold zone and are still holding deep in negative territory. This suggests that the path of least resistance for the USD/CAD pair is to the downside and supports prospects for an extension of the slide from the 1.3565 area or a nearly two-week high touched on Wednesday.

Traders, however, need to wait for some follow-through selling below the 1.3485 region, or the weekly low, before positioning for any further losses. The USD/CAD pair might then accelerate the slide towards the multi-month trough, around the 1.3440 area touched last week before eventually dropping to the March monthly swing low, around the 1.3420 region. The downward trajectory could extend further towards the 1.3400 mark en route to the next relevant support near the 1.3365-1.3360 zone.

On the flip side, the overnight swing high, around the 1.3525 region, could cap any attempted recovery ahead of the 1.3565 area, or the weekly peak. The subsequent move up has the potential to lift the USD/CAD pair back towards the 200-day SMA support breakpoint, now turned resistance, currently pegged near the 1.3590 zone. A sustained strength beyond the latter could negate the near-term negative bias and trigger a short-covering rally towards the 1.3640-1.3645 resistance.

USD/CAD daily chart

Economic Indicator

Unemployment Rate

The Unemployment Rate, released by Statistics Canada, is the number of unemployed workers divided by the total civilian labor force as a percentage. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market and a weakening of the Canadian economy. Generally, a decrease of the figure is seen as bullish for the Canadian Dollar (CAD), while an increase is seen as bearish.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.