USD/CAD Rebound Capped by 50-Day SMA Forward of Canada Employment Report

Canadian Greenback Speaking Factors

USD/CAD continues to commerce throughout the March vary because it struggles to push again above the 50-Day SMA (1.2622), and the replace to Canada’s Employment report could maintain the change price under the transferring common as job development is anticipated to extend for the second consecutive month.

USD/CAD Rebound Capped by 50-Day SMA Forward of Canada Employment Report

The latest collection of upper highs and lows in USD/CAD could unravel because the 50-Day SMA (1.2622) seems to be appearing as resistance, and the change price could give again the rebound from the month-to-month low (1.2502) because the transferring common continues to trace the unfavorable slope carried over from the earlier 12 months.

The replace to Canada’s Employment report could drag on USD/CAD because the economic system is projected so as to add 100.0K jobs in March, whereas the jobless price is anticipated to slender to eight.0% from 8.2% in February. The continued enchancment within the labor market could encourage the Financial institution of Canada (BoC) undertake an enhance outlook as “the economic system is proving to be extra resilient than anticipated to the second wave of the virus and the related containment measures.”

Nevertheless, it appears as if the BoC is in no rush to change gears as “the Governing Council judges that the restoration continues to require extraordinary financial coverage assist,” and it stays to be seen if Governor Tiff Macklemand Co. will regulate the ahead steerage on the subsequent assembly on April 21 because the central financial institution is slated to launch the up to date Financial Coverage Report (MPR).

Till then, USD/CAD could proceed to trace the March vary because it struggles to push again above the 50-Day SMA (1.2622), however the tilt in retail sentiment appears to be like poised to persist as merchants have been net-long the pair since Might 2020.

The IG Shopper Sentiment report reveals 57.13% of merchants are at the moment net-long USD/CAD, with the ratio of merchants lengthy to brief standing at 1.33 to 1.

The variety of merchants net-long is 2.00% larger than yesterday and a couple of.89% larger from final week, whereas the variety of merchants net-short is 4.29% larger than yesterday and 6.96% decrease from final week. The crowding habits in USD/CAD has abated regardless of the rise in net-long curiosity as 60.77% of merchants have been net-long the pair the earlier week, whereas the decline in net-short place comes because the change price makes an attempt to push again above the 50-Day SMA (1.2622).

With that stated, the rebound from the March low (1.2365) could grow to be a correction within the broader pattern somewhat than a shift in USD/CAD habits as the lean in retail sentiment persists, and lack of momentum to carry above the 50-Day SMA (1.2622) could result in an extra decline within the change price because the transferring common continues to mirror a unfavorable slope.

USD/CAD Charge Day by day Chart

Supply: Buying and selling View

• The broader outlook for USD/CAD stays tilted to the draw back because it trades to a contemporary yearly low (1.2365) in March, with each the 50-Day (1.2622) and 200-Day (1.2993) SMA’s nonetheless monitoring the unfavorable slope carried over from the earlier 12 months.
• The Fibonacci overlap round 1.2620 (50% retracement) to 1.2650 (78.6% growth) seems to be appearing as resistance because it strains up with the 50-Day (1.2622), and USD/CAD could fall again in the direction of the 1.2510 (78.6% retracement) to 1.2520 (23.6% growth) area, which coincides with the April low (1.2502).
• Recent month-to-month lows in USD/CAD could carry the 1.2440 (23.6% growth) area on the radar, with the following space of curiosity coming in round 1.2360 (100% growth) to 1.2390 (38.2% growth), which strains up with the March low (1.2365).
• Regardless of the latest rebound in USD/CAD, the Relative Power Index (RSI) continues to carry under 60, and the oscillator could present the bullish momentum abating if it fails to retain the upward pattern from the March low.

— Written by David Track, Foreign money Strategist

Observe me on Twitter at @DavidJSong