Our USD/CAD forecast sees the pair showing some overbought signs in the short term, but the bias remains bullish. It could only consolidate before jumping higher. The pair could resume its upwards movement if the US Dollar Index climbs higher.
The pair stayed higher after the US ADP Non-Farm Employment Change was reported higher at 692K versus 555k expected. The Loonie failed to resume its appreciation even though the Canadian GDP dropped by only 0.3%, less compared to the 0.8% forecast.
Market participants will be in their forex brokers accounts hovering over the buy and sell buttons as they await today’s ISM Manufacturing PMI could shake the markets. The economic indicator could drop from 61.2 to 61.0 points. A potential growth above 61.2 could boost USD/CAD.
The US session could bring high volatility as the US will also publish the Unemployment Claims, Construction Spending, Final Manufacturing PMI, ISM Manufacturing Prices, and the Wards Total Vehicle Sales.
It remains to see how the USD will react as the US is to release the NFP, Unemployment Rate, and the Average Hourly Earnings tomorrow.
USDCAD forecast – technical analysis: bias remains bullish
USD/CAD is traded below the 61.8% retracement level at 1.2392. The bias remains bullish for forex trading as long as it stays above the uptrend line. It moves sideways trying to accumulate more bullish energy.
Coming back above the 61.8% level and making a new higher high could really signal an upside continuation. On the other hand, dropping and stabilizing under the uptrend line could signal a short-term sell-off.
Better than expected US data reported today should lift USD/CAD. DXY’s further growth should push the pair above the weekly R1 (1.2438) level, towards the 1.2486 higher high. Our USDCAD forecast suggests traders should be careful as the pair will be driven by the fundamentals.
USD/CAD is somehow expected to resume its growth after ending its previous corrective phase. Technically, the outlook remains bullish as long as it stays above the weekly pivot point (1.2345).
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