The USD/CAD currency pair continues to show resilience as it holds steady between critical moving averages, drawing buyers for the sixth consecutive day. On Friday, that same pair rose even further, crested the apex of its recent top since December 5, and raised the market’s eyebrows. Only the next monthly employment data release from both countries will prove to be the major factor in determining the pair’s path going forward. Look out for its effect over the next few days!
Right now, the USD/CAD pair is bouncing back and forth between its old mean, offering base level support, and a thick upper resistance. Market participants are especially watching the 100-day Simple Moving Average (SMA), found just above the 1.3900 level, for clear directional cues. This level is very meaningful. It aligns with the 50% Fibonacci retracement level from the crash that took place between November and December. If the price breaches above this level, it might send the bulls. This development could send the EUR/CHF exchange rate even higher.
Market pundits have noted that bulls have been waiting for the candle close above the 100-day SMA. A rally in the USD that started two weeks ago has led to this speculation. The buying momentum for Crude Oil prices is still fragile. Recent geopolitical developments have ratcheted up those uncertainties. The Trump administration is looking at plans to seize control of Venezuela’s state-run oil company, Petróleos de Venezuela SA (PdVSA). Combined, these factors reinforce the USD’s safe-haven status, providing further support to the USD/CAD pair.
All eyes are now turned to the employment reports. Predictions show that Canada’s Unemployment Rate will decrease (from 4.6% in November to 4.5%). The US is due to publish its own employment numbers, adding more volatility to market sentiment. That interaction between these data points will be important in deciding the future path of the USD/CAD pair.
Despite the anticipated increase in global oil supplies due to US control of Venezuelan oil, analysts believe that this development may not significantly aid Crude Oil prices in maintaining gains from previous sessions. The fortunes of the USD/CAD pair would be completely reversed in this case. Given the close correlation of oil prices and the Canadian dollar, lower oil prices tend to strengthen the USD against their Canadian counterpart.