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USD/CAD Daily Forecast – U.S. Dollar Retreats After Disappointing Non Farm Payrolls Report

By:
Vladimir Zernov
Published: Jan 7, 2022, 17:42 UTC

USD/CAD managed to settle below the support level at 1.2680 and is testing the next support level at 1.2650.

USD/CAD

In this article:

Canadian Dollar Moves Higher Ahead Of The Weekend

USD/CAD  is currently trying to settle below the support at 1.2650 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the support level at 96 and moved towards the next support at 95.75. A successful test of this level will push the U.S. Dollar Index towards the 50 EMA at 95.65 which will be bearish for USD/CAD.

Today, U.S. released Non Farm Payrolls report which indicated that economy added just 199,000 jobs compared to analyst consensus of 400,000. Unemployment Rate declined from 4.2% in November to 3.9% in December compared to analyst consensus of 4.1%.

In Canada, Employment Change report exceeded analyst expectations. Canada’s economy added 54,700 jobs in December compared to analyst consensus of 27,500. Unemployment Rate declined from 6% to 5.9%.

The disappointing Non Farm Payrolls report put pressure on the American currency, although it should be noted that Treasury yields continued to move higher. Meanwhile, job market data from Canada boosted Canadian dollar, so USD/CAD found itself under pressure. It remains to be seen whether foreign exchange market traders will continue to ignore rising Treasury yields or they will ultimately provide more support to U.S. Dollar.

Technical Analysis

usd cad january 7 2022

USD to CAD declined below the support at 1.2680 and is trying to get below the next support level at 1.2650. In case this attempt is successful, USD to CAD will move towards the next support at 1.2625.

A successful test of the support at 1.2625 will open the way to the test of the support at 1.2590. In case USD to CAD manages to settle below this level, it will head towards the next support at 1.2550.

On the upside, the previous support at 1.2680 will serve as the first resistance level for USD to CAD. If USD to CAD gets back above this level, it will head towards the resistance at 1.2710. The 50 EMA is located in the nearby, so USD to CAD may face significant resistance near this level. A move above the 50 EMA will push USD to CAD towards the resistance at 1.2730.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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