USD/CAD Exchange Rate Prediction – The USD/CAD Continues to Trend Higher Ahead of CAD Employment Report

The U.S. Dollar continued to move higher against the Loonie ahead of Friday’s Canadian employment report. The dollar was mixed against most major currencies, as the greenback fell against both the Euro and the Japanese yen. The yen generally receives a bid during turbulent times. The further decline in U.S. yields reflects the market’s concern. This scenario is also reflected by the rise in the VIX volatility index, which increased by 18%.

Technical Analysis

The USD/CAD continues to rise after breaking out above trend line resistance. Target resistance is seen near the April highs at 1.2657. Support is seen near the 10-day moving average at 1.2398. short=-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 84, above the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to a higher exchange rate. The RSI is also rising and is just below the overbought trigger level of 70.

Weak U.S. Employment Data Caps the Greenback

Softer than expected Initial Jobless claims weighed on the greenback. Claims unexpectedly rose last week. Initial Jobless claims totaled 373,000 for the week ended July 3, compared with the 350,000 expected. Continuing claims, decreased to 3.34 million, down 145,000 from the previous week’s revised level. The decline in the number of continuing claims represented the lowest level for insured unemployment since March 2020. The four-week moving average for continuing claims, fell by 44,500 to 3.44 million, also the lowest in 15-months.