The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Monday, dragging the price of USDCAD to less than 1.2950 following the release of US employment data on Friday. The technical bias remains bearish because of a Lower High in the recent upside rally.
As of this writing, the pair is being traded near 1.2941. A support can be noted around 1.2773, the swing low of the recent downside move ahead of 1.2678, the horizontal support and then 1.25000, the psychological level. A break and daily closing below the 1.24000 level could incite renewed selling pressure, validating a move towards the 1.2000 zone in the long run.
On the upside, the pair is likely to face a hurdle near 1.3145, the swing high of the last major upside rally ahead of 1.3247-50, the horizontal resistance as demonstrated in the above daily chart. The technical bias will remain bearish as long as the 1.3145 resistance area is intact.
August traditionally has been a difficult month for jobs numbers, and 2016 proved no exception, likely putting the Federal Reserve on hold for a rate hike anytime soon. Nonfarm payrolls increased just 151,000 for the month, extending the futility August has experienced over the years. This is now the 10th time in the past 13 years the month whiffed on market expectations. Wall Street economists were expecting the nonfarm payrolls report to show a gain of 180,000 in August, with the unemployment rate ticking down one-tenth to 4.8 percent. Wage growth slowed.
Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy.