USD/CAD Price Analysis: More downside seems solid below 1.3370 on upbeat oil price and Canada’s job data

• USD/CAD is eyeing more weakness below 1.3370 as Canada’s upbeat job data might force the BoC to reconsider the policy pause.
• Firmer oil prices and an upbeat Canada’s job market have supported the Canadian Dollar.
• US President Joe Biden is scheduled to meet Speaker Kevin McCarthy on Tuesday to talk about the looming debt ceiling crisis.

The USD/CAD pair has found an intermediate cushion after a massive sell-off to near 1.3370 in the early Asian session. The Loonie asset is expected to extend its downside journey as oil prices have strengthened further on expectations that the Federal Reserve (Fed) will pause its policy-tightening spell and strong Canada’s labor market data renewed fears of more interest rate hikes from the Bank of Canada (BoC).

As per Canada’s labor market report (April), Net Change in Employment landed at 41.4K vs. the estimates of 20K. The Unemployment Rate dropped to 5.0% from the expectations of 5.1%. Annual Average Hourly Earnings remained steady at 5.2%.

The US Dollar Index (DXY) has shown some recovery around 101.20 as US President Joe Biden is scheduled to meet Speaker Kevin McCarthy and other congressional leaders on Tuesday to talk about the looming debt ceiling crisis.

USD/CAD is auctioning in a Symmetrical Triangle chart pattern on a daily scale, which indicates sheer contraction in volatility followed by an expansion in the same. The downward-sloping trendline of the aforementioned chart pattern is plotted from 10 October 2022 high at 1.3978 while the upward-sloping trendline is placed from 15 November 2022 low at 1.3226.

Broadly, the 20-period Exponential Moving Average (EMA) at 1.3500 is overlapping the Loonie price, indicating a decline in volatility.

The Relative Strength Index (RSI) (14) has dropped marginally below the bearish range of 20.00-40.00 and sustenance below the same would accelerate bearish momentum.

Going forward, a breakdown below the previous week’s low at 1.3371 will drag the asset toward April 17 low at 1.3343 followed by the round-level support at 1.3300.

On the flip side, a recovery move above April 10 high at 1.3554 will drive the Loonie asset towards January 05 high at 1.3595. A breach of the latter will drive the asset toward April 26 high at 1.3651.

USD/CAD daily chart