- USD/CAD remains supported above 1.3550 ahead of US ADP labor demand data.
- If Employment Change data replicates Job Openings performance, selling pressure on the USD Index would elevate.
- The Lonnie asset turns sideways after a sell-off move to near the 200-period EMA.
The USD/CAD pair retreats after a short-lived pullback move to near 1.3577 in the European session. The Loonie asset remained broadly sideways on Wednesday as investors sidelined ahead of the United States Employment Change data for August to be reported by Automatic Data Processing (ADP).
As per expectations, the US private sector recorded fresh additions of 195K, which were significantly lower than July’s reading of 324K. Job vacancies data released on Tuesday were downbeat and eventually built significant pressure on the US Dollar Index (DXY). If Employment Change data replicates Job Openings performance, selling pressure on the USD Index would elevate and it might slip into a bearish trajectory.
This week, the Canadian Dollar will dance to the tunes of the Q2 Gross Domestic Product (GDP) data. Investors are anticipating that the April-June quarter growth rate was lower than Q1’s growth pace due to the upside risks of higher interest rates by the Bank of Canada (BoC).
USD/CAD discovered selling pressure after a Double Top formation on an hourly scale, which indicates that bids from investors were not enough while attempting a breakout above August 25 high at 1.3640. The Lonnie asset turns sideways after a sell-off move to near the 200-period Exponential Moving Average (EMA), which is around 1.3560.
A breakdown into the bearish range of 20.00-40.00 range by the Relative Strength Index (RSI) (14) will trigger the downside impulse.
Going forward, a downside move below August 29 low at 1.3550 will expose the asset to August 24 low at 1.3510, followed by August 9 high at 1.3454.
In an alternate scenario, a solid recovery above August 25 high at 1.3640 will drive the asset toward March 28 high around 1.3700 and March 27 high at 1.3745.
USD/CAD hourly chart
