USD/CAD Remains Stuck Near 1.2680

U.S. Dollar Is Mostly Flat Against Canadian Dollar

USD/CAD continues its attempts to settle below the support at 1.2680 while U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index is trying to settle below the support at the 96 level. If the U.S. Dollar Index manages to settle below this level, it will head towards the support at 95.75 which will be bearish for USD/CAD.

Today, U.S. released ADP Employment Change report for January which indicated that private businesses cut 301,000 jobs while analysts expected that they would add 207,000 jobs. This was a major surprise for the markets.

It remains to be seen whether the weak job market data (if confirmed by Non Farm Payrolls report on Friday) will have any material impact on Fed’s thinking.

From a big picture point of view, the job market has recovered, and additional stimulus fails to provide more support. In this environment, inflation is the main threat, so Fed will likely remain focused on rising prices while trying to act carefully in order not to put too much pressure on markets and economy.

Technical Analysis

USD to CAD remains stuck near the support level at 1.2680. If USD to CAD settles below this level, it will move towards the next support which is located at the 50 EMA at 1.2665. The 20 EMA is located in the nearby so USD to CAD may get material support near this level.

In case USD to CAD manages to settle below the 50 EMA and the 20 EMA, it will get to the test of the support level at 1.2650. A move below this level will open the way to the test of the support at 1.2625.

On the upside, the nearest resistance level for USD to CAD is located at 1.2710. A successful test of this level will push USD to CAD towards the resistance at 1.2730. In case USD to CAD climbs above this level, it will head towards the resistance at 1.2760.

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