USD/CAD Price Forecast: Awaiting Employment Data at 1.3460 Pivot

The USD/CAD pair has paused its recent downtrend, with a modest rebound as the U.S. dollar gains traction amid heightened geopolitical tensions in the Middle East. This cautious market sentiment, coupled with a dip in crude oil prices—Canada’s key export—has placed the Canadian Dollar under pressure, leading to a modest lift for the USD/CAD pair, now trading near the 1.3460 mark in the Asian session on Friday.

Additionally, West Texas Intermediate (WTI) oil prices have retreated slightly, hovering around $76.20 per barrel, breaking a four-day streak of gains.

Yesterday’s release of the Bank of Canada’s Summary of Deliberations offered insights into the Governing Council’s January 24, 2024, monetary policy decision. The Council observed an unexpected durability in U.S. consumer spending.

However, they forecast a deceleration in the forthcoming quarters as consumers adjust to the cumulative interest rate hikes and deplete the savings they amassed during the pandemic. Nonetheless, the Council is mindful that U.S. spending may remain robust, which poses an upside risk to their projections.

Meanwhile, the U.S. Dollar Index (DXY) is poised to continue its ascent for the second day, currently positioned near 104.20. Yet, this upswing faces some resistance from the softening yield of U.S. bonds, which could potentially dampen the dollar’s momentum.

Despite these yield dynamics, the dollar’s steadfastness is largely supported by a string of hawkish remarks from Federal Reserve officials, underpinning the currency’s strength.

As traders anticipate the upcoming Canadian employment figures, with forecasts predicting a 16.0K increase in employment and an unemployment rate of 5.9%, these economic releases will likely influence the USD/CAD’s near-term direction.

With the market’s focus on these indicators, the pair may experience heightened volatility during the North American trading session.

The USD/CAD pair exhibits a consolidation pattern in today’s analysis, with the current exchange rate hovering around $1.34615. The pivot point, delineated by the green line at $1.34634, remains a critical determinant of the intraday bias.

Resistance levels are seen at $1.34948, $1.35426, and $1.35904, which may challenge bullish advances. Conversely, support is $1.34141, followed by $1.33670 and $1.33320, providing potential floors to bearish dips.

The Relative Strength Index (RSI) is neutral at 47.57, indicating a balance in market momentum. The 50-day Exponential Moving Average (EMA) at $1.34634 suggests the market is at a crossroads. A double bottom pattern near the $1.3450 level suggests a possible buying trend, yet the lack of significant economic triggers could maintain the current holding pattern.

A decisive move below this support level could push the pair towards $1.3414 or even $1.3367. The prevailing sentiment is cautiously optimistic, leaning towards buying above the $1.3450 level and considering a selling position if a breakout below this level occurs.