Talking Points:
- USD/CAD Rebounds From Lows Ahead of US Employment Data
- Prices Test the 10 Day EMA at 1.3494
- IG Client Sentiment Reads +1.18; 54.2% Net-Short
The USD/CAD is rebounding from monthly lows ahead of this Friday’s release of key US employment data. The US Change in Non-Farm Payrolls (May) is expected in at 180k, and the US Unemployment Rate (May) is expected at 4.4%. As high importance events on this week’s economic calendar, their release is expected to provide volatility and direction for US Dollar based pairs including the USD/CAD.
Technically the USD/CAD is trending higher in the short term, rising as much as 135 pips from the standing monthly low at 1.3387. This turn in price has been marked by the USD/CAD trading back above its 10 day EMA (exponential moving average) at 1.3494. Traders should note, that if the pair closes above this EMA it would be for the first time in the last 15 trading sessions. If prices continue to rise going into Friday’s news, this line may be referenced as a point of short term support. Alternatively if the USD/CAD fails to close above the 10 day EMA, it may continue to be referenced as a point of resistance. In a bearish scenario, traders may again look to target the previously mentioned monthly low at 1.3387.
USD/CAD Daily Chart Averages
Why and how do we use IG Client Sentiment in trading? See our guide.
Sentiment totals for the USD/CAD remain net positive, with IG Client Sentiment reading at +1.18. This total reveals that 54.2% of traders are currently long the pair. When read as a contrarian indicator, this sentiment reading maintains a slight bearish bias for the pair. If prices convincingly breakout above the 10 day EMA, traders should look for sentiment figures to flip negative as the pair resumes trending higher. Alternatively if prices are rejected near present values, traders may look for sentiment readings to remain positive. If news later in the week sends the USD/CAD lower, it would be expected to see sentiment values move towards fresh positive extremes of +2.0 or more.
— Written by Walker, Analyst for DailyFX.com
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