The USD/CAD exchange rate saw a slight increase of less than 0.1% on Friday, bouncing back from an early low near 1.3560 to settle around 1.3590. Even after a retreat from the 1.3700 range earlier in the week, this marks a 0.6% drop for the week overall. It seems that momentum is waning around the 1.3580 mark, indicated by a series of small candlestick formations that suggest some hesitation in the market.
Factors like the ongoing U.S.-Iran tensions and the persistent closure of the Strait of Hormuz are critical influences, with rising oil prices lending support to the Canadian dollar, which is closely tied to commodity markets. Over the weekend, ceasefire negotiations reached an impasse as both parties took a firmer stance, and despite government claims of progress, the U.S. continues its naval blockade of Iranian ports, which the market appears to have largely dismissed.
The U.S. ISM Manufacturing Purchasing Managers Index (PMI) for April was at 52.7, just falling short of the expected 53.0. Meanwhile, the employment index decreased to 46.4, contrasting with a rise in the prices paid index, which hit 84.6, the highest level recorded in over four years. In Canada, the S&P Global Manufacturing PMI increased to 53.3 from the previous month’s 50.0, indicating a return to growth in that sector. All eyes are now on next Friday’s heavy economic calendar, notably the U.S. nonfarm payrolls (NFP), which are anticipated to be around 73,000, significantly down from the prior 178,000. Analysts expect Canada’s unemployment rate will remain steady at 6.7%.
USD/CAD 5 minute chart
As per the 5-minute chart, USD/CAD is sitting at 1.3587, slightly above the daily opening figure of 1.3580, which appears to be serving as short-term support. Following the previous rally, the pair has lost some upward momentum, constrained by a downward trendline starting from 1.3680, which limits the chances of a more significant rebound. The latest Stochastic RSI readings reflect a slide towards lower values, implying that while the price is fluctuating around the opening mark, the bullish pressure is dwindling, maintaining a neutral short-term sentiment.
If the price falls below the daily opening of 1.3580, it would suggest weakness in the intraday trend and indicate that sellers might be regaining control in the short term. Conversely, a key resistance level to watch is the downtrend line stemming from 1.3680. Only a sustained push towards that range and breakthrough would disrupt the current bearish trend and pave the way for a more pronounced upside shift.
On the hourly chart, current trading sits at 1.3589, reflecting a mildly bearish outlook in the short term, restrained again by the downtrend resistance near 1.3680. The absence of nearby moving averages has underlined this structural hurdle, while the Stochastic RSI recently slipped into the upper region above 70, indicating that any bullish attempts may encounter resistance just below the mentioned trendline.
The immediate challenge on the upside is that downtrend line at 1.3680, which will necessitate a significant breakout to ease current bearish sentiments and allow for a stronger recovery. With no distinct intraday support visible in the provided data, if there’s a pullback from current levels, traders may find initial demand at the previous session’s low or the intraday swing point just below 1.3589. On the other hand, if the pair fails to challenge the 1.3680 resistance, it remains susceptible to further declines.
