USDCAD popped up from support around the 1.2250 minor psychological level to the 1.2400 area, which lines up with an area of interest. This could also serve as resistance of the new descending channel forming on the 4-hour time frame.
Stochastic is indicating overbought conditions to show that buyers are feeling exhausted and could let sellers take over. If so, the pair could fall back to the swing low or the bottom of the channel.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This suggests that the selloff is more likely to continue than to reverse. However, price has already closed above the 100 SMA to signal strengthening bullish momentum.
Stronger than expected US economic data led to a dollar rally on Friday, with the NFP printing a 200K gain in hiring for January versus the estimated 181K increase. To top it off, the December figure was upgraded to 160K.
The unemployment rate held steady at 4.1% as expected while the average hourly earnings figure beat expectations with a 0.3% increase versus the estimated 0.2% uptick. The previous reading also enjoyed a positive revision to 0.4%.
The ISM non-manufacturing PMI is due today but might not have such a huge impact on the dollar since the jobs report was already released. Canada has its trade balance on Tuesday and its own jobs report lined up on Friday.
By Kate Curtis from Trader’s Way