USDCAD has just completed its second daily close above the one-year downtrend channel. The weaker GDP and PMI data from Canada, coupled with falling oil prices due to weak gasoline demand in the US, have weakened the Canadian dollar. Meanwhile, the US dollar is surging, thanks to a hawkish FED, rising bond rates, and relatively strong economic data from the US. While the downtrend is being tested, a short-term uptrend has also formed, and the price is approaching the upper boundary of that channel.
Depending on the jobs report scheduled for Friday, as long as the price remains below the upper channel (currently at 1.3825), there could be an opportunity for USDCAD bears to initiate a downward move, potentially extending towards 1.3650 or the 200-day moving average if the dollar index weakens sharply. However, if oil prices continue to retreat and the US jobs data comes in strong tomorrow, we may see a surge towards the 76.4% Fibonacci retracement level of the 2020-2021 drop, which is at 1.4040.
