USDCAD in Focus: Key Jobs Data Poised to Trigger Market Volatility

Key labor market reports from Canada and the U.S. are due today at 17:30 (GMT+2), likely driving USDCAD volatility. Since late September, USDCAD has maintained an uptrend, supported by bullish technical patterns and momentum signals. With employment data in focus, analysis of key resistance, support levels, and recent labor trends will help traders anticipate potential price movements.

Friday 17:30 (GMT+2) – Canada: Employment Change (CAD)
Friday 17:30 (GMT+2) – USA: Nonfarm Employment Change (USD)

Since reaching a low of 1.34186 on September 25, USDCAD has been on a consistent upward trend, supported by various technical signals. The rally began with the formation of a non-failure swing reversal pattern, where the trough at 1.34186 did not fall below the previous trough. This was followed by a breakout above the prior peak at 1.36466, indicating a shift in momentum to the upside. Shortly after, a “Golden Cross” double crossover occurred where the 20-period Exponential Moving Average (EMA) crossed above the 50-period EMA, further amplifying the upward momentum.
Momentum indicators continue to reflect a bullish environment. The Momentum Oscillator remains above the critical 100 level, signaling upward pressure, while the Relative Strength Index (RSI) is above 50, highlighting ongoing buying interest. While these signals suggest continued strength in the near term, the presence of negative divergence between the price and the Momentum Oscillator calls for caution, as it may indicate a potential pause or reversal in the current trend.

Should the buyers maintain market control, traders may direct their attention toward the four potential resistance levels below:

1.44660: The initial resistance level is established at 1.44660, which mirrors the peak from December 19.

1.45817: The second price target is set at 1.45817, representing 161.8% Fibonacci Extension drawn from the swing high, 1.44660, to the swing low, 1.42788.

1.46148: The third price objective is observed at 1.46148, corresponding with the weekly resistance, R3, calculated using the standard Pivot Points methodology.

1.47689: An additional upside target is projected at 1.47689, mirroring the 261.8% Fibonacci Extension drawn from the high point, 1.44660, to the low point, 1.42788.

Should the sellers take market control, traders may consider the four potential support levels listed below:

1.42788: The initial support level is seen at 1.42788, corresponding to the daily low formed on January 6.

1.41770: The second support level is estimated at 1.41770, representing the daily high recorded on November 26.

1.40512: The third support level is identified at 1.40512, reflecting the 38.2% Fibonacci Retracement drawn from the swing low, 1.34186, to the swing high, 1.44660.

1.39304: An additional downside target is 1.39304, mirroring the 50% retracement calculated between the low point, 1.34186, and the high point, 1.44660.

U.S. private payroll growth slowed in December, with the ADP National Employment Report showing an increase of 122,000 jobs, down from 146,000 in November. This figure fell short of economists’ expectations of 140,000. Despite being released ahead of the Bureau of Labor Statistics’ official report, the ADP data has shown limited correlation with BLS figures, often underestimating private job gains. December’s slowdown was expected after November’s growth, which was influenced by reduced disruptions from earlier hurricanes and strikes. Reuters forecasts suggest nonfarm payrolls will rise by 160,000, with unemployment holding steady at 4.2%.

On the other hand, Canada added 51,000 jobs in November 2024, the highest in seven months, surpassing expectations of 25,000. Full-time employment drove the increase with a 54,000 gain, while part-time jobs remained flat. Despite the job growth, the unemployment rate edged up to 6.8% as more people entered the labor force. Canada’s employment change is expected to increase by 11,000 jobs by the end of this quarter, according to global macro models and analysts’ forecasts. In the long term, employment gains are projected to average around 40,000 in 2025 and 30,000 in 2026.

With key labor market reports from Canada and the U.S. approaching, USDCAD faces heightened volatility. The pair’s sustained uptrend, underpinned by bullish technical patterns, meets a critical juncture as fresh employment data may either reinforce momentum or trigger a shift. Traders should remain cautious, balancing optimistic signals with potential risks highlighted by divergence and broader labor market dynamics.