USD/CAD Outlook Ahead of US and Canada Jobs Data

Summary:

USD/CAD has formed a bearish flag pattern ahead of jobs data from the US and Canada. The US dollar has been on a decline for three consecutive sessions.

USD/CAD has eased after dropping from C$1.2288 to C$1.2142 in the previous session. The rising risk appetite, coupled with lower-than-expected ADP job numbers on Wednesday, has weakened the US dollar. The dollar index, which tracks the value of the greenback against a basket of currencies, is at 90.91. It has been on a decline for three consecutive sessions after hitting a two-and-a-half week high of 91.44 on Wednesday.

In today’s session, the focus is on the job data from the US and Canada. Goldman Sachs estimates that US nonfarm payrolls (NFP) rose by 1,300k in April. The bank further forecasts a decline of 5.5% for the unemployment rate, and -0.4% for the average hourly earnings YoY.

In the case of Canada, analysts expect an employment change of -175.0K compared to March’s 303.1K. Canada’s jobs data come about two weeks after the Bank of Canada (BoC) began tightening its monetary policy.

USDCAD Technical Outlook

USD/CAD is consolidating along 1.2150 after Wednesday’s plunge. The currency pair dropped from an intraday high of 1.2288 to 1.2142. On an hourly chart, it is trading below the 25 and 50-day exponential moving averages. Besides, the formation of a bearish flag signals further weakness.

In my opinion, USD/CAD will continue finding support at 1.2150. However, a move below that point will have the bears eyeing 1.2100; its lowest level since September 2017. On the flip side, strong US NFP data may push the pair higher to the prior support level at 1.2265.