USDCAD Talking Points:
- This morning’s economic calendar brought the release of both US and Canadian jobs numbers for the month of March. US NFP’s printed at +196k versus the expectation of +170k-+180k. Canadian jobs, on the other hand, disappointed as Canada lost 7,200 jobs versus an expectation for a 6k gain.
- USDCAD put in an initial move of strength as the pair tested the 1.3400 handle; but sellers soon followed to push prices back down to the pre-release range. This keeps prices in a symmetrical wedge pattern that’s been building over the past month, following a bullish breakout from another symmetrical wedge in USDCAD that had built-in from January to March. USDCAD may have attractive potential for traders looking at strategies of USD-weakness given proximity to long-term resistance around the 1.3500-handle.
- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
Do you want to see how retail traders are currently trading USDCAD? Check out our IG Client Sentiment Indicator.
USDCAD Re-Buffed at 1.3400 After US, Canadian Jobs Release
This morning brought the release of key employment data out of both the US and Canada for the month of March. In the US, Non-Farm Payrolls printed at +196k, a nice improvement from last month’s +20k print and a hair above the consensus expectation, which was running from around +170k to +180k. This brought an initial move of weakness in the US Dollar, but that may be dismissed by some traders as the currency was holding a key zone of resistance ahead of the release.
But at the same time this morning Canadian jobs numbers were released, and this was a less rosy picture of economic health as the Canadian economy lost 7,200 jobs in the month of March versus an expectation for a gain of 6k.
The initial response in USDCAD was strength as CAD weakness was quickly priced-in. Prices in the pair ticked-up to the 1.3400 handle, at which point bulls pulled back and prices soon followed. The net of price action in the pair around the 8AM bar is a long-legged Doji; which could possibly keep the door open for short-term bearish strategies for traders comfortable trading within congestion.
USDCAD Hourly Price Chart
Chart prepared by James Stanley
Taking a step back on the pair, and there’s another symmetrical wedge formation that’s built just a month after breaking-above the prior symmetrical wedge. I had looked at bullish setups in the pair coming into March, basing strategy off of the Fibonacci level at 1.3132. Prices soon popped-higher, and buyers ran all the way into 1.3470 until that strength began to pullback. And now, for the past month, price action has been building deeper into another congestion formation.
USDCAD Eight-Hour Price Chart
Chart prepared by James Stanley
Taking a further step back, and traders can start to get an idea as to why bulls have continually shown passive price action around re-approaches towards 1.3500. This is a major psychological level on the pair, and over the past three years, there have only been a few instances of prices in USDCAD testing above this level, each of which turned out badly for bulls. This is likely taking a toll on shorter-term themes as prices in the pair test above the 1.3400 level and buyers stare down a potentially key level of resistance just 100 pips-higher.
What Does This Mean?
If there’s an additional reason for USDCAD bulls to shy away from the bid, that can make USDCAD as an attractive option for strategies of USD-weakness. The US Dollar is fast approaching its own level of key resistance around 97.70 on the chart: This is a level that’s turned around three different bullish themes over the past five months. If the US Dollar has another such instance in its future, the short-side of USDCAD can be very interesting. And for strategies around USD-strength, traders may simply want to look elsewhere as USDCAD may have an extra hurdle to clear given this penchant for resistance to show around the 1.3500 psychological level.
USDCAD Weekly Price Chart
Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
Forex Trading Resources
DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.
If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
