USD/CAD looks set to extend downside movement

US Dollar/Canadian Dollar (USD/CAD) closed yesterday with the large bearish engulfing candle around 1.1024. The pair has resumed the downtrend after printing the Lower High (LH) on the daily chart; the investors are seen cautious ahead of the US job data which is scheduled for release tomorrow.

At the time of this writing, the pair is being traded near 1.1040. Immediate resistance is seen around 1.1065 which is the 50% fib level ahead of the 1.1100 handle that is the psychological level and the 61.8% fib level. A break and daily close above the 1.1100 handle shall expose more rallies towards 1.1160.

On the downside, support is being noted around 1.0980 which is the confluence of the 23.6% fib level and the 200 Daily Moving Average (DMA). A break below 1.0909 will confirm the bearish bias on USD/CAD.

Today the US labor department is due to release the initial jobless claims report. According to the forecast, the number of people, who claimed for the jobless benefits, reduced to 338,000 during the course of the previous week as compared to 348,000 in the week before. A high jobless claims reading is seen negative for the economy and vice versa. So if the jobless claims report comes better than expectations, it will be bullish for USD/CAD.

On Friday, the US labor department will release the nonfarm payrolls and the unemployment rate figures for the month of February. Economists have predicted a better nonfarm payrolls number while a steady jobless rate figure for the previous week. Better than expected US job data will be bullish for USD/CAD and vice versa. The outcome could also affect the monthly monetary policy meeting which is going to be held on March 18-19 in Washington. The FOMC policymakers might announce another tapering in the stimulus if the job data meets the expectations.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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