USDCAD Headed to 1.35?

USDCAD Headed to 1.35?

USDCAD Headed to 1.35?

The price of oil closed below $45 a barrel for the first time since March 19th. Normally this would have driven USD/CAD to fresh highs. However with dual employment reports scheduled for release on Friday investors are treading cautiously and limiting new positions in USD/CAD. The 600-pip rally in the currency pair over the last month took USD/CAD into overbought territory and even though there’s no major resistance until 1.35, investors need to see positive U.S. and/or negative Canadian employment numbers to allow the currency pair to move higher. While economists are looking for strong U.S. jobs data, they are also looking for better Canadian data and how USD/CAD trades will depend on which report has the greater surprise. Ultimately given the move in oil, we expect USD/CAD to head higher and view any decline as an opportunity to buy the pair at a lower level.

Technically USD/CAD is still in a strong uptrend. The break above the 2009 high and 1.30 puts the 61.8% Fibonacci retracement at 1.3475 in view. As long as the currency pair holds above the July 29 low of 1.2862, a move to this level appears likely.

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