Re: Forex Analysis by LiteForex
USD/CAD: the likelihood of a trend change is still low
The USD/CAD pair is showing a downtrend, trading at 1.2115.
CAD continues to look strong against the backdrop of the declining USD; however, Friday's labor market data from Canada made analysts question the strength of CAD. The Unemployment Rate in April rose from 7.5% to 8.1%, showing the most significant deterioration since March 2020. The Net Change in Employment decreased by 207.1K, which turned out to be much worse than the expected decline by 175.0K. Participation Rate fell to 64.9% from 65.2%.
The USD/CAD pair did not change the trend only due to the fact that the situation on the US labor market turned out to be even worse. The Unemployment Rate in April rose from 6.0% to 6.1%. In turn, the employment rate fell in almost all sectors. The number of jobs in the manufacturing industry decreased by 18K, with a projected increase of 55K, and the number of Nonfarm Payrolls increased by 266K, with an expected increase of 978K. Thus, the target indicators for employment were again not reached, so raising interest rates by the US Fed is out of the question.
Support and resistance
On the daily chart, the price continues to form a global descending channel. Technical indicators are in a state of sale: the range of EMA fluctuations on the Alligator indicator continues to expand, and the histogram of the AO oscillator is trading in the sales zone.
Resistance levels: 1.2260, 1.2610.
Support levels: 1.2050, 1.1800.