USD/CAD Price Forecast: Wobbles near 1.3660 ahead of US NFP data

USD/CAD consolidates around 1.3660 as investors await the US NFP data.
The US employment data is expected to significantly influence market expectations for the Fed’s monetary policy outlook.
Both the US Dollar and the CAD remain broadly firm amid the Iran conflict.

Sagar Dua FXStreet

The USD/CAD pair trades in a tight range around 1.3660 during the European trading session on Friday. The Loonie pair consolidates as the US Dollar wobbles ahead of the United States (US) Nonfarm Payrolls (NFP) data for February, which will be published at 13:30 GMT.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, wobbles around 99.00

Investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. The US NFP report is expected to show that the economy created 59K fresh jobs, significantly lower than 130K in January. The Unemployment Rate is seen steady at 4.3%.

Meanwhile, the broader outlook of the US Dollar remains firm amid the war in the Middle East involving the US, Israel, and Iran. Middle East conflicts have prompted the demand for safe-haven assets.

Amid the Iran conflict, the Canadian Dollar (CAD) has been performing strongly due to rising oil prices. Given that Canada is the largest exporter of oil to the US, higher oil prices are a favorable situation for the Canadian Dollar.

Technical Analysis

USD/CAD trades flat at around 1.3660 at the press time. The near-term bias is neutral as spot remains close to the 20-day Exponential Moving Average (EMA) at around 1.3665.

The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 range, indicating a sharp volatility contraction.

Initial support emerges at the February 18 low of 1.3632, guarding the recent 1.3558–1.3559 area that underpins the February base and defines the lower edge of the current range. A break below this band would expose the spot to the February 11 low of 1.3500 and signal that sellers are regaining control. On the topside, immediate resistance is at the March 3 high of 1.3750, where a daily close above would be needed to shift the bias back toward the upside and open the way toward the January 23 high of 1.3800.

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

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

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.

AUD/USD eases from one-month high; holds above 0.7000 amid softer USD

AUD/USD pulls back slightly after hitting a fresh one-month high in the Asian session on Monday as bulls turn cautious ahead of the latest Australian consumer inflation figures and the crucial FOMC decision later this week. Meanwhile, expectations of another RBA rate hike in November support the Aussie. Moreover, a softer US Dollar helps the currency pair hold above the 0.7000 psychological mark.

USD/JPY extends recovery from one-month low beyond 157.00

USD/JPY kicks off the week on a positive note, building on Friday's modest bounce from the 156.00 neighborhood, or a one-month low amid some repositioning ahead of key central bank events and data risks. The Fed and the BoJ will announce their policy decisions on Wednesday and Friday, respectively. This, along with the release of Advance US Q3 GDP and the PCE Price Index on Thursday, should provide some meaningful impetus to the currency pair.

Gold struggles below $4,000 as oil-driven inflation fears reaffirm Fed hike bets

Gold attracts follow-through selling at the start of the new week, trading below $4,000 during the Asian session and near a three-month low. Higher energy prices continue to fuel inflation fears and reinforce US rate-hike expectations, undermining the non-yielding bullion. Bears, however, might refrain from placing aggressive bets ahead of the crucial FOMC meeting and other key central bank events this week.

Week ahead: Central bank and earnings bonanza could roil markets

After joining the rate-hike club in September, the Federal Reserve looks set to stand pat in October, waiting to assess more data before deciding to hike again. Whilst this isn’t an unusual move for a central bank, it somewhat contradicts Fed Chair Kevin Warsh’s new mantra of data dependency and zero forward guidance.

CFTC Report: WTI rally runs ahead of positioning

The week in one sentence: WTI prices surged while speculative longs were cut in the week to October 20, creating the clearest price/positioning divergence. Sterling and the Canadian Dollar led the constructive currency shift, while Yen longs also rebuilt. Speculators turned less constructive on the WTI, reducing their net exposure to around 89.3K contracts.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.