USD/CAD declines approaching 1.3600 ahead of upcoming employment data
FUNDAMENTAL OVERVIEW:
- USD/CAD weakens on expectations of potential Fed rate cuts in 2024 amid softer US economic data.
- US Nonfarm Payrolls are anticipated to add 190,000 jobs, down from the previous 272,000.
- Meanwhile, Canada’s Net Change in Employment is forecasted to decrease to 22.5K in June from the previous 26.7K.
USD/CAD continues its decline for the fourth consecutive session, hovering near 1.3610 in early European trading on Friday. The drop is linked to a weaker US Dollar (USD), influenced by softer US economic data, prompting speculation about potential interest rate cuts by the Federal Reserve (Fed) in 2024.
Traders await Friday’s US employment reports, expecting a slowdown in June’s job growth. US Nonfarm Payrolls (NFP) are forecasted to add 190,000 new jobs, down from 272,000 previously. Average Hourly Earnings are expected to slightly moderate to 3.9% year-over-year from 4.1%.
Meanwhile, the Canadian Dollar (CAD) may see limited gains due to a modest decline in crude oil prices, with West Texas Intermediate (WTI) trading around $83.50 per barrel. Recent OPEC data shows increased production, hinting at potential easing in oil markets ahead, which could further weigh on prices.
Traders are anticipating the Canadian Net Change in Employment data on Friday, with expectations for a decrease to 22.5K in June from the previous 26.7K. Concurrently, projections suggest the Canadian Unemployment Rate may increase marginally to 6.3% from 6.2%.
USD/CAD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CAD is trading within a down channel.
USD/CAD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Sell Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.3633
Immediate support level: 1.3597
HOW TO TRADE USD/CAD
The USD/CAD pair had a strong surge but then faced resistance and reversed course. It’s been stuck trading sideways in a range for a while. Recently, USD/CAD tried to climb again but failed to hold the gains and dropped sharply, breaking below a key support level. Now, it’s testing that same level again (acting as resistance now). If it gets rejected here, USD/CAD could see further declines.