USD/CAD Price Analysis: Remains on backfoot ahead of US/Canada Employment data

• USD/CAD struggles for a firm footing amid soft US Dollar.
• Investors await the US/Canada labor market data for further guidance.
• USD/CAD extended losses after slipping below the horizontal support plotted from 1.3786.

The USD/CAD pair looks for intermediate support near 1.3700 after a sharp sell-off. The Loonie asset remains on the backfoot as investors dumped the US Dollar on expectations that the Federal Reserve (Fed) is concluding its rate-tightening campaign.

The US Dollar Index (DXY) struggles to sustain above the crucial support of 106.00 ahead of the United States Nonfarm Payrolls (NFP) data for October. As per the consensus, US employers hired 180K job seekers against 336K payrolls in September, which was surprisingly upbeat. The Unemployment Rate is seen steady at 3.8%.

Investors would also watch the Canadian employment data for October. Economists expect that the Canadian labor force grew by 22.5K payrolls against 63.8K job additions in September. The jobless rate is seen rising to 5.6% against 5.5% reading.

USD/CAD extended losses after slipping below the horizontal support plotted from October 5 high at 1.3786 on a two-hour timeframe. The Loonie asset has also stabilized below the upward-sloping trendline placed from September 29 low at 1.3417. The major struggles to rebound above the 200-period Exponential Moving Average (EMA), which trades around 1.3755.

A range shift move by the Relative Strength Index (RSI) (14) into the 20.00-40.00 range indicates a bearish reversal.

A decisive break above October 27 high at 1.3880 would expose the round-level resistance at 1.3900, followed by 13 October 2022 high at 1.3978.

In an alternate scenario, a breakdown below October 24 low around 1.3660 would drag the asset to the round-level support of 1.3600. A further breakdown could expose the asset to October 7 low at 1.3570.

USD/CAD two-hour chart