The USDCAD has been moving upwards recently, starting from a low near 1.3472 on October 2. In the past eight trading days, the price has risen to a high of 1.37826. This surge brought the price into a target range between 1.3784 and 1.38036, set back in April 2024.
Today, the Canadian jobs report was released and showed stronger results than anticipated, causing the USDCAD price to drop (leading to a stronger Canadian dollar). Although the price briefly dropped below the 61.8% retracement level at 1.3745, the momentum quickly shifted back up.
Looking ahead, sellers would need to push the price below the 61.8% retracement level to gain more confidence. The recent strong jobs report raises questions about the Bank of Canada’s potential rate-cutting plans and whether the selling pressure has subsided.
Analyzing the 5-minute chart, we can see that after testing the rising 200 bar MA in late trading yesterday, the price moved below the MA line in the Asian session today. However, the downward momentum was not significant, and the price quickly rebounded, surpassing the moving averages and using them as support levels before the jobs report.
Despite the initial sharp decline following the positive employment data, the price has rebounded and now sits above the moving averages. This has led short sellers to reconsider their positions, with buyers gaining control above the MAs. The key question now is whether the price can maintain its position above these moving averages.
If the price continues to hold above the moving averages, we may see more short covering and potential upward movement towards the 1.3803 level on the 4-hour chart. However, if the price fails to break above these levels, sellers could regain control, targeting the 100/200 bar MAs on the 5-minute chart and the 61.8% retracement level at 1.3745 for potential downside movement.
