Canadian dollar analysis: USD/CAD probing key support near 1.33

Canadian dollar takeaways

A combination of strong jobs data, surging oil prices, and hawkish comments from BOC Governor Macklem pushed USD/CAD to test multi-month lows in the 1.3300s.
Key support levels sit down around 1.3320 and 1.3250.
Meanwhile, a recovery above the 200-day EMA around 1.3400 could clear the way for a more substantial bounce this week.

Canadian dollar fundamental analysis

As it often does, the first Friday of the month brought dueling jobs reports from the US and Canada…and as it turns out, both North American countries received stellar news about their labor markets.

The US NFP report showed +253K net new jobs (vs. 181K eyed, albeit with negative revisions to previous reports) and wages rising by 0.5% m/m (vs. 0.3%), while Statistics Canada reported +41.4K new jobs in Canada (vs. 21.6K expected).

On balance, the Canadian report was relatively stronger, but more to the point, the strong economic data alleviated some concerns about global economic growth, leading to a broad-based rally in risk assets heading into the weekend. The Canadian dollar was a big beneficiary of that optimism, as was the price of oil, Canada’s most important export. Relatively hawkish comments from BOC Governor Macklem no doubt helped boost the loonie as well.

Canadian dollar technical analysis– USD/CAD Daily Chart

Source: StoneX, TradingView

As we start a new trading week, USD/CAD is probing its lowest level in months in the mid-1.3300s. More to the point, the pair is peeking below its 200-day EMA for only the second time since last June, signaling that the longer-term uptrend may be losing momentum.

In terms of the short-term levels for USD/CAD traders to watch, the rising trend line starting in November coincides with today’s low near 1.3320, and if that support level gives way, the 8-month low near 1.3250 would represent the next major support level to watch.

Meanwhile, a bounce back above the 200-day EMA near 1.3400 could embolden short-term bulls for this week, though readers with a longer-term perspective may prefer to see the pair clear the April highs in the mid-1.3600s (perhaps accompanied by falling oil prices) to start looking for bullish swing- or position-style trades.

-- Written by Matt Weller, Global Head of Research

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor