USD/CAD retreats from the 50-DMA around 1.2712 to 1.2670s

• The Loonie gains 0.07% vs. the greenback in the New York session.
• The FX complex is in a risk-off mood, the JPY, and the CHF rise.
• USD/CAD remains upward biased, despite retreating near 1.2650s.

The Loonie gains ground vs. the greenback for the third consecutive day in the week. At press time, the USD/CAD is trading at 1.2672. The market sentiment is mixed, as some European equity indices recorded losses. Meanwhile, US stock indices advance, except for the Russell 2000, down 1.20% during the day.

In the FX complex, the mood shifted towards a risk-off as portrayed by recent JPY and CHF strength, up some 0.28% and 0.25%, respectively. In the meantime, the US Dollar Index, a gauge of the greenback’s value against a basket of six peers, losses almost 0.50%, sitting at 95.95.

On Wednesday, the US economic docket featured the ADP employment report for January. Market participants expected an increase of 207K jobs added to the economy but instead witnessed the losses of 301K. That was noticed by some Fed members, like Philadelphia Fed Patrick Harker, who expects that the Nonfarm Payrolls report would be bad due to the spread of the Covid-19 Omicron variant.

In the report, the ADP Chief Economist said, “That the labor market took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth.”

In the commodities market, particularly US crude oil due to its high correlation to the Canadian dollar, the Western Texas Intermediate also known as WTI,  rises 0.05% during the North American session, trading at $88.39 per barrel.

USD/CAD Price Forecast: Technical outlook

The USD/CAD retreated from the 50-day moving average (DMA). Nevertheless, the upward bias remains in place as long as the 100 and the 200-DMA remain positioned below the spot price, though almost horizontal.

The retracement witnessed in the last three trading sessions stalled around the February 1 daily low at 1.2654. However, a breach of the latter would expose the 100-DMA at 1.2620, followed by the 1.2600 figure.

Contrarily, if the USD/CAD uptrend resumes, the first resistance would be 1.2700, immediately followed by the 50-DMA at 1.2712. An upside break would open the door towards January 28 highs at 1.2797.