Current trend

The USD/CAD pair shows a moderate growth, developing the "bullish" momentum formed last week. The instrument is testing 1.3585 for a breakout, holding close to local highs from September 19.

The US currency is receiving significant support from the September labor market report published last Friday. Nonfarm Payrolls increased by 254.0 thousand after increasing by 159.0 thousand in the previous month, while analysts expected 140.0 thousand, Average Hourly Earnings accelerated in annual terms from 3.9% to 4.0% with a forecast of 3.8%, but in monthly terms the indicator slowed down from 0.5% to 0.4% with expectations of 0.3%, while the Unemployment Rate decreased from 4.2% to 4.1%. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of the US Federal Reserve cutting interest rates by 50 basis points in November is now less than 30.0%, while the week before last, before the speech of the regulator's Chair Jerome Powell, it exceeded 60.0%.

The Canadian labor market report will be released later this week, with forecasts suggesting an increase in the Net Change in Employment from 22.1 thousand to 34.5 thousand, Average Hourly Wages remaining in the region of 4.9–5.0%, and the Unemployment Rate at 6.6%. Bank of Canada Governor Tiff Macklem announced that the regulator plans to expand the Board of Governors from six to seven members, creating an external staff position that will also vote on borrowing cost adjustments. As the regulator navigates an increasingly complex and rapidly changing economy, creating a second external role will add additional perspective and bring new skills and experience, the official said.

Support and resistance

On the daily chart, Bollinger Bands are reversing horizontally. The price range is slightly narrowing from above, being spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic retains a steady upward direction, but is located in close proximity to its highs, which points to the risk of overbought US dollar in the ultra-short term.

Resistance levels: 1.3600, 1.3622, 1.3650, 1.3675.

Support levels: 1.3569, 1.3550, 1.3524, 1.3500.

Trading tips

Long positions can be opened after a breakout of 1.3600 with the target of 1.3650. Stop-loss — 1.3575. Implementation time: 1-2 days.

A rebound from 1.3600 as from resistance, followed by a breakdown of 1.3569 may become a signal for opening of new short positions with the target at 1.3524. Stop-loss — 1.3600.