The USD/CAD has in the early morning and has jumped above the 1.3776 yesterday’s high, but the bears have stepped in the game and now have driven the price down. The USD has lost significant ground versus the Loonie as the dollar index has plunged aggressively in the second part of the day.
The dollar index has edged lower and has erased the morning gains, is trading in the red and is approaching the 98.54 static support, remains to see how will react when will hit this level. We’ll have a bounce back on the USDX only if the price will stay above the mentioned support level, we could still have a minor Falling Wedge pattern if the 98.54 support will hold. The dollar index dropped somehow surprisingly in the afternoon as the United States data have come in better, but this drop could be only temporary, only a drop below the mentioned static support, followed by a retest will confirm that the index will drop much deeper.
The dollar’s drop could be caused by the rumors that the Federal Reserve will hike the rate again in June, maybe the today’s data will force the FED to raise the rate.
The greenback has dropped even if the Unemployment Rate has dropped unexpectedly from 4.5% to 4.4% in April, even if the traders have expected to see an increase to 4.6%, the Non-Farm Employment Change increased unexpectedly higher, from 98K to 211K, exceeding the 194K estimate estimate. Moreover the Average Hourly Earnings rose by 0.3%, matching expectations, but unfortunately the greenback wasn’t impressed and now could drop again. The US Consumer Credit will be released later, but I don’t think that will have any impact on this pair.
The Loonie has received support from the Canadian Unemployment Rate, which has dropped from 6.7% to 6.5% in April, even if the estimate was 6.7%, while the Employment Change has disappointed because was reported at 3.2K, much below the 20.0K estimate and versus the 19.4K in the previous reporting period. The Canadian Ivey PMI surged from 61.1 to 62.4, beating the 62.3 estimate.

USDCADdaily

Price has found strong resistance at the second warning line (wl2) of the former ascending pitchfork and now is going down, the retreat is natural after the impressive rally . Has failed to reach the 61.8% retracement level and now could come even to retest the upper median line (uml) of the minor ascending pitchfork if the sliding line (minor ascending dotted line) will not hold. The perspective remains bullish on the short to the medium term after the breakout above the 50% retracement level. We could have a buying opportunity after the minor retreat remains to see where will find strong support, could bounce back from the sliding line (minor ascending dotted line from above the uml), from the upper median line (uml) or from the 50% retracement level. Could find support also at the third warning line (wl3), only a drop below the 50% retracement level and below the wl3 will invalidate the upside movement. The next upside target will be at the 61.8% retracement level.

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