Current trend

Quotes of the USD/CAD pair are adjusted downwards, during the Asian session holding at around 1.3637. The catalyst for the downward movement remains the weak position of the American currency, which cannot recover after the publication of the June labor market report.

In turn, Canadian statistics also did not act as a driver for a change in trend: in June, the overall Unemployment Rate increased from 6.2% to 6.4% compared to preliminary estimates of 6.3%, reaching a January maximum of 2022, which, in in particular, was facilitated by an employment correction of −1.4 thousand after an increase of 26.7 thousand in May. The data reflected severe pressures remaining in the national economy, although the labor market was on a growth trajectory until June. Now investors fear that the positive trend towards the recovery of the sector may be broken, which, in turn, will be a key factor for the Bank of Canada in keeping interest rates at the current level for a long period of time or even returning to "hawkish" rhetoric.

As for the American currency, its quotes are correcting at 104.6 points in USDX, continuing their downward trend after the publication of weak labor market statistics. The Employment level increased by 206.0 thousand relative to 218.0 thousand, exceeding experts’ expectations of 191.0 thousand, while the May Employment statistics were revised downward from 272.0 thousand. Unemployment rose from 4.0% to 4.1% compared to forecasts of 4.0%, and Average Hourly Earnings slowed down from 0.4% to 0.3% MoM, and from 4.1% to 3.9% YoY, confirming the cooling of the labor market, bringing its condition closer to that required by US Federal Reserve officials to transition to a "dovish" rate. Today at 16:00 (GMT 2), Fed Chairman Jerome Powell will address Congress with his semi-annual report, and most experts are confident that he will not reveal the Fed’s plans for changing monetary policy. Earlier announcements by officials about several interest rate cuts put significant pressure on the position of the national currency, so now officials' rhetoric is likely to be much more restrained. This time too, the main topic will most likely be significant progress in the fight against inflation and the need to continue monitoring macroeconomic statistics for a timely response to possible risks, which ultimately virtually eliminates a reduction in borrowing costs during the July meeting.

Support and resistance

On the daily chart, the price remains below the channel support line with dynamic boundaries of 1.3950–1.3650.

Technical indicators reversed and issued a sell signal: the EMA fluctuation range on the Alligator indicator is expanding in the downward direction, and the AO histogram forms new downward bars, being below the transition level.

Support levels: 1.3610, 1.3490.

Resistance levels: 1.3650, 1.3740.

Trading tips

Short positions can be opened after the price consolidates below the support level of 1.3610 with the target of 1.3490. Stop-loss — 1.3650. Implementation time: 7 days and more.

Long positions should be opened after the price consolidates above 1.3650 with the target at 1.3740. Stop-loss — 1.3600.