The USD/CAD pair crashed in the last hours as the US reported mixed data while the Canadian economic figures came in better than expected. Technically, the price signaled an overbought situation in the short term, so a sell-off was in cards as well.
The Canadian Unemployment Rate dropped from 5.1% to 5.0%, even though traders expected a potential growth of 5.2%, while Employment Change came in at 104.0K far above the 5.5K expected.
On the other hand, the NFPs came in at 223K above the 200K expected but below 256K in the previous reporting period. The unemployment rate dropped to 3.5% whereas traders expected the rate at 3.7%. Average Hourly Earnings rose by 0.3% versus the 0.4% expected. Still, the US ISM Services PMI produced a major surprise by dropping from 56.5 points to 49.6 far below 55.0 estimates signaling contraction. Also, the Factory Orders reported a 1.8% drop versus the 0.9% drop forecasted.
USD/CAD Targeting New Lows!
Technically, the rate rebounded in the first part of the day as the DXY rallied. It has failed to reach and retest the former uptrend line and it has registered only a false breakout through the upper median line (uml).
Now, it has dropped below the 1.3484 - 1.3470 support zone and through the median line (ml). It has ignored the S1 (1.3480) as well and it seems very heavy.
USD/CAD Forecast!
The current breakdown through 1.3470 and below the median line (ml) is seen as a selling opportunity. Still, after its drop, the rate could come back to test and retest the median line before dropping deeper. The S2 (1.3420) is seen as the first target and obstacle. The S3 (1.3350) and the lower median line (lml) represent downside obstacles and potential targets if the rate continues to drop.
