The USD/CAD currency pair reversed earlier gains on Thursday, with the Canadian Dollar recovering some ground against the US Dollar. At the time of writing, USD/CAD was trading around 1.3895, having pulled back from an intraday high of 1.3925, which marked its highest level since April 7 [1]. The US Dollar faced modest pressure as market sentiment improved following a ceasefire agreement between Israel and Lebanon, which also raised hopes for renewed US-Iran peace talks after recent stagnation [1].
Oil prices, a key driver for the Canadian Dollar due to Canada's status as a major crude exporter, retreated sharply. West Texas Intermediate (WTI) Crude Oil fell more than 3% on the day after three consecutive days of gains. The softer oil prices could limit deeper selling in USD/CAD, but traders remained cautious and avoided aggressive bets ahead of major employment reports from both the United States and Canada scheduled for Friday [1].
Economists expect the US Nonfarm Payrolls (NFP) report to show an increase of 85,000 jobs in May, down from 115,000 in April, with the Unemployment Rate forecast to remain unchanged at 4.3%. In Canada, employment is expected to rise by 10,000 after a decline of 17,700 in April, with the Unemployment Rate projected to hold steady at 6.9% [1].
From a technical perspective, USD/CAD remains above key support levels, including the 200-day Simple Moving Average (SMA) at 1.3812 and the 100-day SMA at 1.3721, supporting a constructive near-term bias. The Relative Strength Index (RSI) is near 68, approaching overbought territory, while the Average Directional Index (ADX) at around 24 suggests a moderate, strengthening trend. Resistance is seen at 1.3920 and the psychological 1.4000 level, with support at the 200-day and 100-day SMAs [1].
CONCLUSION
USD/CAD's uptrend remains intact despite a pullback from recent highs, as traders weigh softer oil prices and improved geopolitical sentiment. Market participants are expected to remain cautious until the release of key US and Canadian employment data, which could provide further direction for the pair.