Bullish Reversing Pattern in USD/CAD After the Bounce Off the 100 Weekly SMA
USD/CAD began to tumble after failing at the resistance zone around 1.39 once again. Buyers aimed to break through this resistance zone, but the USD lost steam in late October as the FED began to provide dovish signals, and this pair declined significantly, losing approximately 700 pips in the process. The loss was temporarily halted around 1.35, but it resumed after Jerome Powell reiterated that rate cuts are coming at the last FED meeting, and USD/CAD dipped below 1.32, but it is now making a bullish reversal as the USD tries to come back.
At the end of 2023, markets were too optimistic about the amount of rate cuts the FED would provide in 2024 at around 160 bps, but now those odds have declined somewhat to 120-130 basis points and the USD has benefited from this. In the last week of last year, USD/CAD touched the 100 SMA (green) on the weekly chart, which acted as support and the weekly candlestick closed as a doji, which indicates a bullish reversal.
Last week, the bullish reversal started so it seems like the decline in this pair is over. The employment reports from the US were sort of mixed, showing a mixed picture of the labour market in December, however, they leaned toward the positive side, which helped the USD further. The employment report from Canada was also mixed, and didn’t help the CAD much, with risk sentiment being on the retreat as the price action in stock markets showed. So, we will look to buy the retreats lower on smaller timeframes on tis forex pair.
Canadian December 2023 Jobs Report
- December employment 0.1K versus 13.5 K estimate
- November employment was +24.9K
- Unemployment rate 5.8% versus 5.9% expected.
- Prior unemployment rate 5.8%
- full-time employment -23.5 K versus 59.6K last month
- part-time employment was 23.6 K versus -34.7K last month
- average hourly wages permanent employees 5.7% versus 5.0% last month
- participation rate 65.4% vs 65.6% last month
Details of the report:
- Increase in employment in various sectors:
- Professional, scientific, and technical services: +46,000 jobs (+2.4%)
- Health care and social assistance: +16,000 jobs (+0.6%)
- “Other services” (including personal and repair services): +12,000 jobs (+1.5%)
- Decrease in employment in specific industries:
- Wholesale and retail trade: -21,000 jobs (-0.7%)
- Manufacturing: -18,000 jobs (-1.0%)
USD/CAD Live Chart
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