USD/CAD Slides Toward 1.37 as NFP Looms and Dollar Hits 8-Week Low

Quick overview

USD/CAD traded in a tight range during the European session, stuck around 1.3775 as investors held back ahead of the US Nonfarm Payrolls release, which was pushed back. The pair has been struggling to attract buyers – the US dollar’s been weakening overall, and markets are gearing up for some pretty unusual two-month jobs report covering both October and November.

The US Dollar Index (DXY) kept on taking a pounding near 98.15, its lowest level in about eight weeks – a sign that Treasury yields are softer and that markets are getting more confident that the US interest rates have hit peak. Given that the positioning’s been pretty light, traders aren’t making any wild bets on this one – they’re waiting to see how the data impacts expectations around Federal Reserve policy in 2026.

NFP and US Data – What to Expect from the Near-Term

Tuesday’s NFP release is going to be weird – November payroll growth is looking good for a 50,000 gain, but October is expected to show a 60,000 decline after that big 119,000 gain we saw in September. The unemployment rate is projected to creep up to 4.5% from 4.4%, while average hourly earnings are expected to bounce back 0.3% month-over-month after last month’s pretty muted print.

Markets are going to be keeping an eye on:

• US Retail Sales (Nov) – forecast to grow by 0.2% month-over-month
• S&P Global PMIs (Dec prelim) – an early look at how things are shaping up

If the labor market or consumption numbers come in weaker, that will confirm the expectation that the US Fed will cut rates again, and we can expect USD/CAD to stay on the back foot. On the other hand, if we see stronger numbers than expected that could give the dollar a bit of a boost, at least in the short term.

Canada’s Inflation – How It’s Keeping CAD Steady

The Canadian side of things is stable. The November CPI is right in line with expectations at 2.2% year-over-year, slightly below the forecast. Core CPI is still running at a solid 2.9%. This is good news for the Bank of Canada – it gives them the room to take a more patient approach, and that’s helping to keep the CAD pretty firm – and that’s limiting the upside for USD/CAD.

USD/CAD Technicals – Sellers Have the Upper Hand

Looking at the 2-hour chart, we’re still in a bearish pattern, with price holding below the 50-day EMA (1.3790) and the 100-day EMA nearby (1.3830), both of which are acting as overhead resistance. That downtrend from above 1.4000 is still intact.

Recent candles have small bodies and short wicks, suggesting we’re consolidating rather than seeing a real reversal. The key support level is around 1.3755; resistance is capping the pair at 1.3795. RSI is stable at around 52 – not really any real momentum – and we don’t have any sign of a bullish divergence either. The 38.2% Fib level at 1.3830 fits right in with the resistance zone.

USD/CAD Outlook – What to Watch Out for Next

• If the NFP comes in softer, then USD/CAD could head down to 1.3710
• A hawkish surprise might get traders cutting their losses and pushing the pair toward 1.3830
• If we break below 1.3755, though, then I’d expect to see some real downside pressure

For now, USD/CAD is just waiting for the data to come in – and right now the risks are skewed a bit lower unless we see some really surprising numbers out of the US.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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