USD/CAD Price Forecast: Seems vulnerable below mid-1.3600s as traders await US data

USD/CAD remains on the defensive for the second straight day, though it lacks bearish conviction.
A downtick in Crude Oil prices undermines the Loonie, offsetting a softer USD and capping the pair.
The broader technical setup favors bearish traders and backs the case for a further depreciation.

Haresh Menghani FXStreet

The USD/CAD pair turns lower for the second straight day and trades below mid-1.3600s through the early European session on Wednesday, though the downtick lacks bearish conviction amid mixed cues. The US Dollar (USD) struggles to attract any buyers amid bets for more rate cuts by the US Federal Reserve (Fed). However, softer Crude Oil prices undermine the commodity-linked Loonie and act as a tailwind for spot prices.

From a technical perspective, this week's failure near the 1.3700 mark – the 50% Fibonacci retracement level of the downfall in January – andthe subsequent slide favors the USD/CAD bears. Moreover, the 200-period Simple Moving Average (SMA) on the 4-hour chart trends modestly lower, with spot price hovering around it, which keeps a fragile near-term bias. The Moving Average Convergence Divergence (MACD) line remains below the Signal line and the histogram contracts in shallow negative territory near the zero line, suggesting fading bearish pressure.

The Relative Strength Index (RSI) sits at 43, below the 50 midline, reinforcing a cautious tone without oversold conditions. In the meantime, the 38.2% Fibo. retracement level at 1.3651 acts as immediate resistance, and a decisive push above would open room toward 1.3704, or the 50% retracement, which should cap the recovery attempt. A rejection under this barrier would keep rebounds shallow and leave the focus on maintaining traction above the 200-period SMA to avoid renewed downside pressure.

(The technical analysis of this story was written with the help of an AI tool.)

USD/CAD 1-hour chart

Economic Indicator

ADP Employment Change

The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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