USD/CAD Is Ready for Retracement - Who's Up for It?

The USD/CAD was closed at 1.39218 after placing a high of 1.39902 and a low of 1.39084. Overall the movement of USD/CAD remained bearish throughout the day. At 17:17 GMT, the Housing Starts in April increased to 171K against the expectations of 107K and supported Canadian Dollar. At 17:30 GMT, the Employment Change reported that during April, Canada lost 1993.8K jobs, which were expected to be 4000K. The Unemployment Rate from Canada increased to 13% against the expected increase to 18%. The Building Permits in March was reported to be 13.2% down, when the expected drop was 20.1%. 

The number of houses that started construction in April increased, better than expected fall in the job loss during April and better than expected rise of unemployment rate along with the better than expected decline in the building permits from Canada during March, all helped CAD to gain strength against U.S. dollar on Friday. Strong CAD due to strong employment data dragged down the USD/CAD pair and extended the losses of the pair at the ending day of the week. 

Furthermore, the recovery in Crude Oil prices on Friday due to risk-on market sentiment after the easing of lockdown measures and increased demand for oil also added in the strength of commodity-linked currency Loonie and further weighed on USD/CAD prices on Friday.

Meanwhile, the USD was also supportive of its better than expected employment data on Friday. The Average Hourly Earnings from the United States recorded at 4.7% during April, whereas 0.5% was the expected figure. The Non-Farm Employment Change fell by 20.5M jobs during April, undwer the expected 22M and supported the U.S. dollar. The U.S. Unemployment rate was recorded as 14.7% against the forecasted 16% and helped the U.S. dollar to gain traction in the market.

The strength of the U.S. dollar after employment data limited the losses of USD/CAD pair on the ending day of the week; however, it failed to reverse the pair's direction.

USD/CAD- Daily Technical Levels

Support Resistance

1.3920       1.3941

1.3912       1.3954

1.3898      1.3962

Pivot Point: 1.3933

USD/CAD- Daily Trade Sentiment

The USD/CAD was trading bullish around 1.3965 level, but it entered the oversold zone. Traders seem to drive the bullish correction in the market until 38.2% Fibonacci retracement level of 1.400 and 1.3035, which marks a 50% Fibonacci retracement level.  

Above 1.3910, the USD/CAD pair has formed a bullish engulfing pattern, which may drive bullish retracement in the Loonie. On the lower side, the USD/CAD may find support at 1.3905 and 1.3864, the double bottom pattern. Let's look for selling trades below 1.3933 and buying above the same level to target the 1.400 level today.