USD/CAD Rebound Looks to Canada Employment for Fuel
- USD/CAD constructive above 1.3030 ahead of Canada Jobs Report
- Updated targets & invalidation levels
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Technical Outlook: USD/CAD turned from confluence slope support on strong divergence late-last month with this week’s rally capped by the 38.2% retracement at 1.3209. Heading into the close of the week the broader focus remains higher while above 1.3030 with a topside breach eyeing more significant resistance targets at 1.3254 & 1.3283- both area of interest for exhaustion / short-entries. .
Notes: Interim support rests at 1.3090-1.3102 backed by 1.3030 (bullish invalidation). Interim resistance stands at 1.3153 backed by basic trendline resistance off the December highs (~1.3190s) & key resistance into 1.3227/54. A breach above 1.3283 would be needed to suggest a more significant reversal is underway.
From a trading standpoint, heading into tomorrow’s Canada employment report I’ll favor fading weakness while above 1.3030 with targeting subsequent topside objectives into structural resistance. Keep in mind consensus estimates are calling for a contraction of 10K jobs in the month of January with unemployment widely expected to hold at 6.9%. The U.S. University of Michigan surveys are released shortly after and could also fuel added volatility in the USD crosses.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are long USDCAD- the ratio stands at +1.38 (58% of traders are long)- weak bearish reading
- Long positions are 5.0% higher than yesterday but 20.0% below levels seen last week
- Short positions are 8.4% lower than yesterday but 8.9% above levels seen last week
- Open interest is 1.1% lower than yesterday and 2% below its monthly average
- While the current SSI profile continues to point lower, the broader pullback in long positioning on falling open interest highlights a continued weakening of the bearish signal and leaves he short-side vulnerable near-term.
Relevant Data Releases
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Other Setups in Play:
- NZD/USD Coils as Traders Await RBNZ – Levels to Know
- USD/JPY Approaches Key Slope of Influence
- AUD/JPY to Threaten Key Support Ahead of RBA
- Weekly Strategy Webinar: USD Majors at Key Inflection Points
- EUR/USD Risks Near-term Exhaustion Heading into NFPs
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.