The Canadian dollar has been able to string together gains against the greenback after full-time employment bounces back in line, reducing speculation that the Bank of Canada (BoC) will cut interest rates to spur growth. In January, Canada added 50,500 full-time jobs, while part-time employment fell by 21,500. The Canadian dollar seen a decline of 4.5 percent last month alone, and it is likely that the USDCAD will continue lower to correct.
In “No Give on USDCAD, Up 1.5 Percent,” I said “the weekly price action support is located at 1.0975, while a residual bump forward to 1.1180 is probable. Going forward, with all things considered equal, the pair should continue moving upward over the next few months,” after busting through the previous target of .10800.
The pair seen a high of 1.223 US dollars to the Canadian counterpart, and price action began to tumble from overbought territory. The pair is likely to continue to correct downward. Interestingly enough, price action bounced off 1.0975 support. However, the ADX has sloped considerably since the peak, which is an indication there is rapid decline in the previous uptrend. There is also a +/-DMI bearish crossover in the works, and this could increase the momentum downward. Potential support areas reside at 1.0920/35, and the psychological round number of 1.0900.
However, the dollar has fallen out of favor this week even though equities have rebounded quickly. If the dollar’s sentiment remains weak, the USDCAD could head to 1.0830. Resistance is seen at 1.1100, which it could take another shift in sentiment to return to multi-year highs.