- USD/CAD struggles for a firm direction on Friday and remains confined in a narrow range.
- Traders now await the release of the monthly employment data from the US and Canada.
- Bearish traders might wait for sustained weakness below the 1.3385 confluence support.
The USD/CAD pair extends its sideways consolidative price moves through the mid-European session and remains confined in a narrow trading band below mid-1.3400s.
The US Dollar selling remains unabated on the last day of the week amid growing acceptance that the Fed will slow the pace of its rate-hiking cycle. This, in turn, continues to cap the USD/CAD pair, though a modest downtick in oil prices undermines the commodity-linked Loonie and acts as a tailwind. Traders also seem reluctant to place aggressive bets ahead of the monthly employment reports from the US and Canada.
From a technical perspective, the USD/CAD pair, so far, has managed to hold above the 1.3400 mark and the 100-period SMA on the 4-hour chart. The latter, currently pegged around the 1.3385 area, coincides with over a two-week-old ascending trend-line extending from the November swing low and should now act as a pivotal point. A convincing break below will be seen as a key trigger for bears and set the stage for further losses.
The subsequent downfall will expose the crucial 100-day SMA support, currently around the 1.3300-1.3290 region. Some follow-through selling should pave the way for an extension of the recent sharp pullback from a 29-month peak touched in October.
On the flip side, the overnight swing high, around the 1.3470 zone, might act as an immediate barrier ahead of the 1.3500 psychological mark. A sustained strength beyond the latter could lift the USD/CAD pair towards the 1.3575-1.3580 hurdle en route to the 1.3600 mark and the multi-week high, around the 1.3645 zone set on Tuesday.