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I’m seeing a simple break-and-retest setup on the short-term chart of USD/CAD.

Will the upcoming Canadian jobs release allow support to hold?

Before moving on, ICYMI, today’s Asia-London session watchlist looked at the EUR/CAD range resistance ahead of the ECB’s 18-month policy review results. Be sure to check that out if it’s still a valid play!

And don’t forget to check our newly released real-time Currency Strength Meter!

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • ECB head Lagarde’s speech at 10:00 am GMT
  • BOE Governor Bailey’s speech at 10:00 am GMT
  • ECB monetary policy meeting accounts at 11:30 am GMT
  • Canadian jobs report at 12:30 pm GMT

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

This textbook break-and-retest setup on USD/CAD seems too good to pass up!

The pair recently busted through the resistance around the 1.2450 minor psychological mark and reached a high of 1.2591 before retreating.

If this is a correction from the bullish run, the Fibonacci retracement levels might be enough to draw buyers back in. The 50% Fib level, in particular, could be a good spot to go long since it lines up with the dynamic support at the 100 SMA.

This faster-moving MA is above the 200 SMA to confirm that support is more likely to hold than to break. In addition, Stochastic is already heading north to reflect the presence of bullish pressure.

This could all hinge on the upcoming Canadian jobs release, though, as an upside surprise might spur a strong rally for the Loonie.

Analysts are counting on a rebound of 172.5K after the earlier 68K drop in hiring. This could bring the jobless rate down from 8.2% to 7.8% for June.

Keep in mind, however, that the Greenback remains strongly supported since the FOMC minutes hinted that more policymakers are open to tapering stimulus soon.

With that, any potential Loonie rallies might be short-lived and USD/CAD could resume the climb to the swing high next.