USDCAD is trending lower, moving inside a descending channel on its 1-hour time frame. Price just bounced off the channel support and is making its way up to the resistance at the 1.3400 major psychological level.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Also, the 200 SMA lines up with the 61.8% Fib and channel resistance, adding to its strength as a ceiling. The 100 SMA is closer to the 50% Fib, which might keep gains in check as well.
Stochastic is on the way up to show that buyers are still in control of price action for now, but the oscillator is already approaching the overbought zone so a return in selling pressure might be due, possibly leading to another test of channel support at the 1.3250 area.
Last week, the OPEC leaders agreed on their first output deal in nearly a decade, deciding to lower production levels in an effort to keep oil prices supported. This could lead to more gains for Canada’s struggling energy sector, supporting spending and employment as well.
The BOC is set to make its monetary policy statement later this week and probably keep interest rates on hold for the time being. Jobs figures came in better than expected on Friday, as the economy added 10.7K positions instead of losing 16.5K workers. The unemployment rate also improved from 7.0% to 6.8%.
As for the US, the NFP reading was in line with expectations of a 177K gain while the unemployment rate fell from 4.9% to 4.6%. However, average hourly earnings slipped by 0.1% instead of posting the estimated 0.2% gain. Still, this might not be enough to dampen Fed rate hike expectations this month.