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USD/CAD falls sharply to near 1.3320 amid a correction in the USD Index.
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Investors await the US/Canada labour market data for further guidance.
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The Loonie asset struggles to break above the 23.6% Fibo retracement.
The USD/CAD pair fell sharply after failing to extend the upside above 1.3370. The loonie edged lower near 1.3320 as the US Dollar Index (DXY) corrected following the release of the Federal Open Market Committee (FOMC) minutes. Decreasing towards 2% first to ensure inflation is progressing.
S&P500 futures posted some gains in the European session, illustrating a revival in risk-appetite among market participants. The USD index fell to around 102.20 ahead of the December employment data release.
Investors are also awaiting employment data from Canada, due out on Friday. The unemployment rate is seen rising to 5.9% against the previous reading of 5.8%. Labor additions by Canadian employers were 13.5K, down from the previous addition of 24.9K in November.
USD/CAD is struggling to break above the 23.6% Fibonacci retracement at 1.3350 (plotted from 1 Nov 2023 high 1.3900 to 27 Dec 2023 low 1.3177). The asset may find an intermediate support near the 20-period exponential moving average (EMA), which is currently trading near 1.3306.
A range shift move by the Relative Strength Index (RSI) (14) into the 40.00-80.00 trajectory from the 20.00-60.00 area indicates that the downside bias has been faded now and investors may look for dips to build fresh positions.
Fresh upside would appear if the Loonie asset decisively breaks above 23.6% Fibo retracement, which is around 1.3350. This will drive the asset towards December 18 high at 1.3410, followed by 38.2% Fibo retracement at 1.3453.
On the flip side, downside bias could stem if the pair drops below December 28 low of 1.3180. This would expose the asset to July 25 low near 1.3150, followed by July 13 low around 1.3193.
USD/CAD four-hour chart
USD/CAD
