USD/CAD Forecast: Sellers Dominant at 1.2400 After Fed, Eying US NFP

• USD/CAD remains on a bearish track despite the uplift provided by the Fed tapering.
• Fed’s unclear stance on rate hike is keeping the Greenback on backfoot.
• US NFP is expected to come up with positive numbers according to the ADP figures.

The USD/CAD forecast is bearish as the price maintains a negative tone after paring off yesterday’s gains and closing below the 1.2400 mark.

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Despite the Federal Reserve’s efforts to push the dollar to recapture territory it lost earlier this week, the USD/CAD price remains roughly unchanged throughout the day. As the Canadian dollar recovered from a three-week low hit by falling oil prices, investors supported the Federal Reserve’s decision to cut its bond-buying program.

The G10FX room was relatively quiet after the Fed meeting after the policymakers announced that they would cut bond purchases in November to end in 2022. However, they believed that high inflation would be “temporary” and unlikely to prompt a rate hike shortly.

However, recovery will now depend on how the economy performs, and there can be volatility today as JOLTS are released ahead of Friday’s key non-farm employment number.

It is more likely that inflation will be less “transitory” than expected, increasing the likelihood of an earlier rate hike than expected. However, officials believe inflation will slow down as the COVID rainfall subsides.

The Fed still doesn’t forecast rate hikes until the end of 2023, but the data will determine the exact timing when it is released. As fiscal stimulus weakens to the point that policy becomes restrictive, we anticipate a slowdown in momentum by the middle of next year that would delay action.

ADP’s US private sector employment report showed surprising gains, perhaps a prelude to Friday’s employment data. Following an increase of 523,000 in September (revised below 568,000), the streak grew to 571,000.

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USD/CAD price technical forecast: Bulls vs. bears at 1.2400

The USD/CAD price remains under bearish pressure, falling from the mid-1.2400 area towards the 1.2375 zone. However, the pair found some respite by the confluence of 20-period and 50-period SMAs on the 4-hour chart. Any bullish attempt will find resistance at 1.2450 ahead of 1.2500. On the flip side, 1.2370 will be the initial support ahead of 1.2300. The volume data shows a negative picture while the 200-period SMA is also keeping a downward pressure.

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