USD/CAD Falls Below 1.3700 Amid US-China Trade Talks
USD/CAD slips below 1.3700 as focus turns to the US-China trade discussions
FUNDAMENTAL OVERVIEW:
On Monday, the USD/CAD is broadly drifting lower as the impact of the strong US Nonfarm Payrolls report fades and investors turn their attention to the US-China trade talks scheduled in London later today.
Officials from the world’s two largest economies aim to ease recent trade tensions and resume progress made during last month’s Geneva discussions, which resulted in notable tariff reductions and a positive market response. While sentiment remains somewhat optimistic, traders are becoming increasingly cautious toward the US Dollar.
On Friday, the US Dollar surged following a stronger-than-expected rise in May’s Nonfarm Payrolls, easing fears of an economic slowdown sparked by weak business activity reports and a disappointing ADP Employment figure.
The US economy added 139,000 new jobs in May, surpassing forecasts of 130,000. The Unemployment Rate held steady at 4.2%, while wage growth remained stable at 3.7%. Overall, these numbers highlight a tight labor market and support the Federal Reserve’s stance that there’s no immediate need to cut interest rates further.
In Canada, employment rose by 8,800 jobs in May, rebounding from a 7,400 decline in April and beating expectations of a 15,000 job drop. However, optimism was tempered as the unemployment rate increased to 7% from 6.9%, reaching its highest level since the pandemic. Following the data release, the Canadian Dollar weakened.
USD/CAD TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/CAD is trading within a down channel.
USD/CAD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Neutral Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.3707
Immediate support level: 1.3635
HOW TO TRADE USD/CAD
On the higher time frame, USD/CAD experienced a sharp rise but faced rejection, breaking below its support zone. Since then, the pair has continued to move lower, forming a series of lower lows. Currently, after breaking the support, the price is pulling back. If it faces resistance and gets rejected again from the upside, the downward trend is likely to resume.