USD/CAD Price Analysis: Bulls rejected by the 100-day SMA following US NFPs

• USD/CAD reversed its course during the American session and got rejected by the 100-day SMA, falling to near 1.3335.
• NFPs showed that job creation in July cooled down while wages increased.
• Canada reported soft labour market and economic activity figures.

On Friday, the USD/CAD cleared daily gains and fell into negative territory as investors dumped the USD following Nonfarm Payrolls revealing that job creation cooled down in July. Canada also reported weak labour market data, so what driving the pair downwards is mainly the broad USD weakness via lower US yields.

The latest Nonfarm Payrolls report for the US presented a mix of data, painting a complex picture of the labour market. In July, the headline indicated the creation of 187,000 jobs, which fell short of the anticipated 200,000 but still exceeded the revised figure of 185,000 from previous reports. On the positive side, the Average Hourly Earnings experienced a 0.4% increase in the same month, surpassing expectations. Additionally, the yearly figure for Average Hourly Earnings rose to 4.4%.

Overall, the American labour markets flashed mixed signals during the week, but it appears to remain unbalanced while the economic activity remains resilient. This means that the Federal Reserve (Fed) may consider hiking at least one more tambien in the remainder of the year. Investors have opted out of rising wages as US yields decreased. The 2-year yield decreased by more than 1% to 4.80%, while the 5-year rate lead the decline, falling by more than 2% to 4.19%. The 10-year rate also weakened and fell to 4.11%, a sharp decline.

On the Canadian side, labour market data came in soft. In July, the number of employed people contracted by 6,400 while markets expected 21,100 newly employed workers while the unemployment rate remained steady at 5.5% YoY. Other data showed that the Ivey PMI released by the Richard Ivey School of Business, which captures business conditions in Canada, came in at 48.6 vs the 52.7 expected.

USD/CAD Levels to watch

The daily chart shows signs of bullish exhaustion for USD/CAD. The technical outlook appears neutral to bearish, with the Relative Strength Index (RSI) displaying a negative slope but staying above its midline and the Moving Average Convergence Divergence (MACD) showing fading green bars. Moreover, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, indicating that the bulls aren't done yet and that the outlook is stillin favour of the buyers.

Resistance levels: 1.3400 (100-day SMA), 1.3454 (200-day SMA), 1.3500.
Support levels: 1.3280, 1.3250, 1.3240.

USD/CAD Daily chart