CAD – Canada is also facing pressure for an interest rate cut, with the Canadian dollar slowly declining

Canada also released employment data last Friday, showing nearly 1.6 million unemployed in August, with tens of thousands of jobs lost. The unemployment rate reached its highest level in nine years outside of the pandemic, raising expectations for a central bank rate cut this month to over 92%. Statistics Canada said the unemployment rate rose 0.2 percentage points to 7.1% in August, the highest level since May 2016, excluding the two years of the COVID-19 pandemic in 2020 and 2021. The report said Canadian jobs fell by 65,500 in August, far worse than the expected increase of 10,000, with most of the jobs being part-time. The Canadian economy has shown resilience in the face of US tariffs on steel, aluminum, and autos in recent months, but Statistics Canada's labor force data suggests that the tariffs are affecting other sectors. Following the data release, the USD/CAD pair initially fell before stabilizing, falling to as low as 1.3756 before recovering to 1.3829 in late trading.

Since mid-June, the USD/CAD exchange rate has formed three bottoms at similar levels: 1.3539 on June 16, 1.3556 on July 3, and 1.3575 on July 23. The recent breakout above the June 23 high of 1.3798 and the July 17 high of 1.3774 suggests the start of a new, extended rally. Based on the cumulative decline since February, a 38.2% rebound would reach 1.4020, while a 50% and 61.8% rebound would reach 1.4167 and 1.4315, respectively. Furthermore, the 250-day moving average of 1.3980 and the nearby 1.40 level remain crucial support levels. Support is expected at the 50-day moving average of 1.3740 and 1.36, with significant support at 1.35 and 1.3418.

Forecast range:
Resistance: 1.3980 – 1.4000/20 – 1.4167 – 1.4315
Support: 1.3740 – 1.3600 – 1.3500 – 1.3418

Any questions? contact our professional analysis team