USD/CAD pierces 1.2700 as US Initial Jobless Claims fall

• The Loonie losses during the New York session amid risk-off market mood as countries impose COVID-19 restrictions.
• Crude oil prices are down, as COVID-19 restriction measures could impact demand for black gold.
• USD/CAD Price Forecast: The pair is mild-bearish, facing strong resistance around 1.2700. 

At the time of writing, the USD/CAD advances up some 0.42% on Thursday, trading at 1.2703 during the New York session. On Thursday, imposing restrictions in the UK and the increased transmissibility of the omicron variant worsened market mood amid the optimism of the vaccine’s effectiveness. That, along with good US employment figures, and the safe-haven status of the buck, weighed on the Loonie..

US Initial Jobless Claims drops the most since 1969

On Thursday, the Bureau of Labor Statistics (BLS) reported that the Initial Jobless Claims for the week ending on December 3 rose to 184K, lower than the 215K, declining the most since 1969, beating economists’ estimations. 

During the overnight session, the USD/CAD seesawed around Wednesday’s high at 1.2666. However, as market sentiment has worsened, due partly to the omicron news, the pair edged higher, near the 1.2700 figure, retreating to current levels. Furthermore, the US Dollar Index, which tracks the greenback’s performance against a basket of six rivals, is recovering from Wednesday’s losses, up 0.31%, sitting at 96.19, a tailwind for the USD/CAD.

In the meantime, US crude oil benchmark WTI is down almost 0.77%, trading at $71.80, exerting additional pressure on the oil-linked Canadian dollar.

That said, USD/CAD trader’s focus would turn to Friday’s US inflation figures, as Fed policymakers have expressed the need for a faster bond taper, so the US central bank has room to maneuver.

USD/CAD Price Forecast: Technical outlook

The USD/CAD 4-hour chart depicts the bias as mild-bearish, as the spot price is below the 50 and 100-simple moving averages (SMA’s). Furthermore, it is trading near the confluence of the 100-SMA and the 38.2% Fibonacci retracement, around 1.2700, which would be a difficult resistance to overcome. Nevertheless, in the outcome of breaking upward, the next resistance would be the confluence of the 50% Fibonacci retracement and the trendline break, around 1.2720-30 area.

On the downside, the first support would be the December 8 high at 1.2666, followed by the central daily pivot at 1.2640, and then the December 8 low at 1.2605.