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USDCAD Market Analysis

2/6/2023 11:30 AM

The USD/CAD pair is moderately declining, correcting after a noticeable growth at the end of last week, and is near 1.3400 (near the local highs of January 31).

Traders react to the strong report on the US labor market for January, released last Friday, trying to predict how it will affect the decisions of the US Federal Reserve: nonfarm payrolls increased by 517.0K, more than twice better than analysts' forecasts, and the unemployment rate corrected from 3.5% to 3.4%, although experts expected it to rise further to 3.6%. The Institute for Supply Management (ISM) service PMI accelerated sharply from 49.2 points to 55.2 points against the forecast of 50.4 points.

Canada did not publish its employment statistics last week, and the data will be released next Friday: investors are counting on a moderate drop in the number of employees from 104.0K and a decrease in the share of the labor force in the total population from 65.0% to 64.8%. The unemployment rate is likely to remain at the same level of 5.0%.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range is narrowing, reflecting the ambiguous nature of trading in the short term. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic shows more confident growth and is currently located approximately in the center of its working area, signaling in favor of further development of upward dynamics in the ultra-short term.

Resistance levels: 1.3450, 1.3500, 1.3550, 1.3600. | Support levels: 1.3400, 1.3350, 1.3300, 1.3226.

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