- It’s hard not to notice the fact that the 1.36 level is a major support level, with the 200-Day EMA backing it up.
- All things being equal, this is a market that I think continues to go higher over the longer term, and it’s worth noting that the employee figures out above the United States and Canada on Friday give us a bit of a bifurcation between the 2 economies.
Employment
The Non-Farm Payroll numbers in the United States came out with an addition the 206,000 for last month, but there were some negative revisions in the past. On the other side of the equation, the employment change in Canada was a loss of 1400 jobs, instead of the expected 27,300 added from last month. In other words, Canada is bleeding jobs, albeit slowly, while the United States continues to add them.
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Recently, the Bank of Canada has cut rates, and it’s likely that we could continue to see the Canadian central bank do the same if employment really gets hammered. On the other side of the equation, it looks like the Federal Reserve is probably going to be very cautious about cutting rates anytime soon, therefore I think you get a situation where it makes a lot of sense that we at the very least bounce from here, perhaps trying to get to the back of the top of the range that we had been in previously, opening up a move to the 1.38 level given enough time.
On the other hand, if we break down below the 1.3550 level, then it’s likely that the market could drop down to the 1.34 level underneath, which of course is a level that we have seen quite a bit of, and therefore I think you’ve got a situation where in that area could be a huge floor in the market, showing that we could see a lot of value hunters coming back into the situation. I don’t necessarily think that’s going to be the case, but it is an outlier type of scenario that we need to be aware of.
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