USD/CAD Analysis: Breaks 1.25 After US NFP, Awaiting ISM Data

• USD/CAD price falls below 1.2500, maintaining a bearish bias.
• US NFP came far too lower than expected, weighing heavily on the US dollar.
• The unemployment rate fell to 5.2% from the previous 5.4%.
• Recovering oil prices are further weighing on the pair.

The USD/CAD pair analysis shows a bearish bias as the key 1.2500 level has been broken. Meanwhile, the US NFP figures missed expectations by a huge difference.

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The USD/CAD pair moved sideways around 1.2545 during the first half of the day before experiencing strong bearish pressure. The pair fell at the lowest level since August 11, 1.2493, before rebounding modestly. A quick check of the quote shows the pair down 0.11% to 1.2537 as of writing.

US Bureau of Labor Statistics data released Friday showed that nonfarm payrolls rose by 235,000 in August. By a wide margin, this value did not match the market forecast of 750,000 and caused a decline in US dollars. In response to initial reactions, the US dollar index fell below 92.00 for the first time in a month but managed to come back to the 92.20 level.

In a positive development, the unemployment rate declined from 5.4% to 5.2%, while the workforce participation rate remained stable at 61.7% over the period.

After losing some ground, crude oil prices are rising, which may support the commodity-linked Loonie.

ISM will revise its August PMI report for further impetus later in the session. After the August employment report, US stock index futures lost most of their daily gains, suggesting that the dollar may benefit from prudent market sentiment in the afternoon.

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USD/CAD price technical analysis: 200-SMA to cap gains

The USD/CAD price broke the key 1.2500 level briefly and reversed the losses partially. The pair may test the support levels at 1.2487 ahead of 1.2425. The average daily range is at 71% so far. The pair lacks volatility today. The volume supports the downside for now. However, we can expect mild upside retracement. The price staying below the 200-period SMA on the 4-hour chart will retain the bearish pressure.

On the upside, 1.2550 is the support turned resistance that may hamper the upside. The next resistance can be 1.2600 area.

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