USD/CAD Looks Vulnerable As Bearish Engulfing Pattern Weighs

The US Dollar (USD) extended upside movement against the Canadian Dollar (CAD) on Friday, increasing the price of USD/CAD to more than 1.0930 just ahead of some major economic events. The sentiment remains bullish due to higher high in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.0931. A hurdle may be noted around 1.0985, the swing high of the recent upside rally ahead of 1.1000, the psychological number and then 1.1211, the 161.8% fib level as demonstrated in the following chart.

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On the downside, the pair is likely to find a support around 1.0900, the 76.4% fib level ahead of 1.0803, the 50% fib level and then 1.0706, the 23.6% fib level. The sentiment will remain bullish as far as the 1.0620 support area is intact.

Unemployment Rate

The rate of unemployment remained 7.1% in July as compared to 7.1% in the month before, the median projection of different economists say. Generally speaking, higher unemployment rate is considered negative for the economy, hence a better than expected actual reading will be seen as bearish for USD/CAD and vice versa.

Net Change In Employment

The Canadian economy added 20.0K jobs in July as compared to 9.4K decline in the jobs during June, according to the median projection of different economists. The Statistics Canada is due to release the employment change data today in the US session. Generally speaking, an increase in the employment is considered positive for the economy, hence a better than expected actual reading will be seen as bearish for USD/CAD and vice versa.

Conclusion

Keeping in view the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy in short to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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