Last week, the USDCAD currency pair approached the upper boundary of the ascending channel but failed to break through and subsequently retreated. Bears then seized the initiative, targeting the channel’s lower limit and the 1.395 level. No significant support is seen until the 1.39–1.395 range, so reaching this threshold would be no sweat. The price may try to break below this support, however, the chances of success are slim.
The Stochastic Indicator has already entered oversold territory on the daily chart, but no clear signs of an upward reversal are visible yet. Meanwhile, the RSI remains in the zone of average values, showing no definitive trend. Keeping short positions may still be reasonable, but it would be prudent to lock in at least partial profits as the pair approaches the 1.395 level. A cluster of moving averages—the 50-, 100-, and 200-day EMAs—will preclude a deeper fall in USDCAD.
A new wave of interest in the Canadian dollar was sparked by Friday's release of the country's October labor market report. The statistics turned out to be unexpectedly strong, with the unemployment rate falling from 7.1% to 6.9%. This bolstered expectations that the Bank of Canada would no longer cut its key interest rate, and that the 18-month cycle of monetary policy easing could be considered complete, removing significant pressure from the national currency.
The dollar, in contrast, may be in a tougher position. Today, the US Congress is scheduled to vote on ending the government shutdown, paving the way for a long-awaited release of economic statistics. According to analysts surveyed by Reuters, the US labor market report for September is projected to be published late next week. The October data will follow afterward, but yesterday's ADP figures paint a rather grim picture, indicating that the number of jobs in the United States began to decline by the end of last month.
Consider the following trading strategy:
Selling USDCAD at the current price. Take profit: 1.395. Stop loss: 1.407.
This content is for informational purposes only and is not intended to be investing advice.
