- The USD/CAD price analysis shows stronger bullish sentiment as the dollar recovers.
- The JOLTS report revealed that job openings in the US rose to 7.77 million.
- Economists expect slower US job growth in June and for the unemployment rate to jump from 4.2% to 4.3%.
The USD/CAD price analysis shows stronger bullish sentiment as the dollar recovers on signs of strength in the US labor market. However, market participants are still awaiting the crucial monthly employment report for more clues on the outlook for Fed rate cuts.
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Data on Tuesday revealed that demand for labor in the US remains resilient. Economists had expected job vacancies to drop. However, the JOLTS report revealed that job openings rose to 7.77 million. The surprise figure eased worries about the state of the labor market amid the recent slowdown.
Trump’s tariffs have had a negative impact on the economy, which has piled pressure on the Fed to lower borrowing costs. Economists expect slower job growth in June and for the unemployment rate to jump from 4.2% to 4.3%. A softer-than-expected report will increase rate cut expectations, weighing on the dollar.
Moreover, Powell was more dovish in his recent speeches, saying the Fed would cut rates if inflation does not spike. He also failed to rule out the possibility of a rate cut at the next meeting. Meanwhile, experts like Goldman Sachs believe the central bank could deliver three rate cuts this year. Therefore, the downside potential for USD/CAD remains.
USD/CAD key events today
- ADP Non-Farm Employment Change
USD/CAD technical price analysis: Bulls challenge the downtrend at the 30-SMA
On the technical side, the USD/CAD price has pulled back to retest the 30-SMA after making a new low in the downtrend. It trades slightly below the SMA, with the RSI under 50, suggesting bears are still in the lead.
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The price briefly broke below the 1.3625 support level to make a lower low. However, it pulled back and is now challenging the 30-SMA. A break above the SMA line will signal a bullish sentiment shift. However, for bulls to take charge, they must also break above the 1.3700 key level and start making higher highs and lows.
On the other hand, if bears remain in the lead, the price will eventually bounce lower. The next target is at the 1.3550 support level. A break below this level would solidify the bearish bias.
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