The employment data from Canada and the U.S. diverged sharply, with Canada posting a weaker-than-expected jobs report, while the U.S. data came in stronger. This fundamental contrast pushed USDCAD higher. However, the rally has stalled near 1.42386—a key level defined by the lows from March 6 and March 26. This area also marks the adjusted lower boundary of the consolidation range that has largely contained price action since mid-December.
Although there were previous breaks outside this "red box"—mostly driven by tariff headlines—the sharp drop yesterday stood out because it occurred despite tariff-related news. The break below the red box was a clear bearish technical signal, and the market initially reacted accordingly.
Yesterday’s decline extended below a swing area between 1.4088 and 1.4104, and also breached the 50% retracement level of the move up from the September 2024 low at 1.4108. However, sellers failed to maintain momentum below that level, and price did not extend toward the 200-day moving average at 1.39866. This inability to follow through gave buyers an opening, and the supportive jobs data helped fuel the rebound.
What now? Despite the bounce and fundamental tailwind, the 1.42386 level remains a critical technical ceiling. Buyers need to break and hold above this level to gain more control. Without that, sellers remain in play. A sustained move above would also need to navigate through a cluster of resistance levels, including:
100-day moving average at 1.42803
100-bar and 200-bar MAs (4-hour chart) at 1.4309 and 1.43225
Absent a break above 1.42386 with momentum, the risk is for a rotation lower, with support targets at 1.4178 and 1.4150.
In other markets: US stocks are off their low levels but still lower on the day. The S&P is down -121 points. The Dow industrial average is down -934 points in the NASDAQ index is down -430 points as applied by the futures.
US yields are still down but off their lows levels:
2-year yield 4.586%, -13.9 basis points5-year yield 3.628%, -13.1 basis points10 year yield 3.938%, -11.5 basis points30 year yield 4.375% -10.8 basis points..
This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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