USD/CAD Exchange Rate Prediction – The Dollar Breaks Out as Momentum Rises

The dollar broke out on Thursday following the Labor Department claims data and following Wednesday’s meeting minutes that showed the Fed is considering a date to begin contracting its bond purchase program. Federal Reserve officials at their July gathering made plans to pull back the pace of their monthly bond purchases likely before the end of the year.

Technical Analysis

The dollar broke out on Thursday, surging above trend line resistance. Target resistance is now seen near the February highs at 1.2864. Support is the former breakout level near 1.2735. Medium,-term momentum is positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This buy signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line.

Claims Data Show Declining Trend

The spread of the Delta variant of the coronavirus is taking its toll on South States. The North-East and California seem to be steady and jobs data reflects that status. Jobless claims hit a pandemic-era low last week. Jobless claims for the week ended August 14 totaled 348,000, according to the Labor Department. That was below expectations of 365,000 and a decline of 29,000 from the previous week. Continuing claims also fell, dropping to 2.82 million on a 79,000 decrease from the week before.