Early European trading hours on Friday witness the USD/CAD pair maintaining its position below the critical 1.3400 mark. The downward pressure on the pair is attributed to a weakening US Dollar (USD) and subdued US Treasury bond yields. As of now, the pair is hovering near 1.3378, marking a marginal 0.08% decline for the day. Traders are eagerly awaiting the release of the US Nonfarm Payrolls (NFP) report later in the day, with expectations set at 180,000 job additions in January.
Technical Analysis Highlights:
From a technical standpoint, the bearish sentiment prevails for USD/CAD, characterized by its position below the 50- and 100-period Exponential Moving Averages (EMA) on the four-hour chart. Notably, the 50-hour EMA teeters on the brink of crossing below the 100-hour EMA. A definitive crossover on the four-hour chart would confirm a Bear Cross, signaling that the path of least resistance for USD/CAD leans towards the downside.
Crucial Support and Resistance Levels:
Support Levels: The pair’s critical support lies at 1.3360, denoting the lower boundary of the Bollinger Band and corresponding to the low of January 31. A breach of this level would expose the psychological round figure of 1.3300, followed by the low of January 2 at 1.3228.
Resistance Levels: On the flip side, the initial barrier to the upside is identified at the upper boundary of the Bollinger Band around 1.3430. A decisive breakthrough above this level could pave the way for a rally towards the 1.3500 round mark. Further upside potential is indicated by a high recorded on January 25 at 1.3535.
As the USD/CAD pair navigates market dynamics influenced by the US Dollar’s performance and technical signals, traders will closely watch these key levels for potential shifts in momentum. The forthcoming US Nonfarm Payrolls report is anticipated to serve as a significant catalyst, potentially steering the pair’s direction in the short term.