- The USD/CAD pair is bearish after failing to stay above the median line (ml).
- The US data should move the price today.
- A larger downside movement could be activated after taking out the lower median line (LML).
The USD/CAD price dropped on Friday during an earlier London session. The pair is trading at 1.3577, far below yesterday’s high of 1.3641.
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The greenback started to drop again as it showed overbought signs. The currency pair retreated, but a larger drop still needs confirmation.
The Canadian Dollar took the lead even though the US Unemployment Claims came in at 190K in the last week, below 196K expected, compared to 192K in the previous reporting period. Also, Revised Nonfarm Productivity rose by 1.7%, while revised Unit Labor Costs surged by 3.2%.
Today, the US data could be decisive. The fundamentals should move the rate so that the volatility could be high. The US ISM Services PMI is expected to drop from 55.2 points to 54.5 points, while Final Services PMI could remain steady at 50.5 points.
Poor US figures should weaken the greenback, while positive data could lift the USD/CAD pair. In addition, the Canadian data could have some impact as well. Building Permits may report a 1.7% growth after the 7.3% drop in the previous reporting period, while Labor Productivity is predicted to report a 0.2% growth.
USD/CAD price technical analysis: Downside correction
Technically, the currency pair found resistance at the 1.3664 historical level, signaling that the leg higher ended. Its failure to stay above the ascending pitchfork’s median line (ML) signaled exhausted buyers. The rate tries to test and retest the median line (ML) and the 1.3664 but without success, confirming that the sellers could take the lead again.
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Now, it challenges the weekly pivot point of 1.3570. Taking out this downside obstacle may announce a further drop, at least towards the lower median line (LML). A larger drop could only be activated after a valid breakdown below this dynamic support. On the contrary, false breakdowns may announce a new leg higher.
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