Big Test Ahead for USDCAD as Markets Eye Jobs and PMI Services Data

With USDCAD under sustained bearish pressure and key technical indicators pointing to continued downside momentum, upcoming economic data releases could serve as critical catalysts for market direction. Thursday’s high-impact events—including U.S. Nonfarm Employment Change and ISM Services PMI—may either reinforce the current trend or trigger a corrective bounce, especially in light of the emerging bullish divergence on the charts. Traders should remain alert to shifts in sentiment driven by these releases, as both fundamental and technical dynamics converge at a pivotal juncture for the pair.

High Impact Economic Events

Thursday 09:30 am (GMT+3) – Switzerland: CPI m/m (CHF)

Thursday 15:30 (GMT+3) – USA: Nonfarm Employment Change (USD)

Thursday 17:00 (GMT+3) – USA: ISM Services PMI (USD)

Chart Analysis

Following its peak at 1.47920 on February 3, USDCAD has declined by over 8% at the time of writing, under pressure from a combination of fundamental developments and technical factors.

From a technical standpoint, the pair is trading below both the 20- and 50-period Exponential Moving Averages (EMAs), reinforcing a prevailing bearish bias. Momentum indicators continue to support this view: the Momentum Oscillator remains below the 100 mark, signaling persistent downside pressure, while the Relative Strength Index (RSI) is holding below the neutral 50 level, indicating sustained selling interest.

Nonetheless, the emergence of a bullish divergence between the price and the Momentum Oscillator warrants attention. This divergence may suggest the potential for a pause in the current downtrend or a corrective rebound in the near term.

Key Resistance Levels

Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:

1.37970: The initial resistance level is set at 1.37970, which mirrors the swing high marked June 23.

1.40154: The second price target is identified at 1.40154, representing the high point from May 13.

1.42342: The third price objective is determined at 1.42342, which corresponds with the daily low formed on March 26.

1.43138: An additional price target is established at 1.43138, representing the 61.8% Fibonacci Retracement drawn from 1.47920 to 1.35390.

Key Support Levels

Should the bears maintain market control, traders may consider the four potential support levels listed below:

1.35390: The initial support level is seen at 1.35390, corresponding to the swing low marked on June 16.

1.34169: The second support level is estimated at 1.34169, representing the weekly support, S3, estimated using the standard Pivot Points methodology.

1.31216: The third support level is identified at 1.31216, reflecting the 261.8% Fibonacci Extension drawn from the low point, 1.35390, to the high point, 1.37970.

1.27041: An additional downside target is 1.27041, mirroring the 423.6% Fibonacci Extension drawn from the low point, 1.35390, to the high point, 1.37970.

Fundamentals

U.S. private companies unexpectedly cut 33,000 jobs in June, missing forecasts that predicted a gain of 99,000 jobs, according to the latest ADP National Employment Report. The decline suggests employers are hesitant to hire or replace workers, even though layoffs remain rare. Despite the drop in employment, annual pay still rose by 4.4%, indicating that wage growth remains steady for now.

On the other hand, the Canadian dollar (known as the “loonie”) gained strength against the U.S. dollar on Wednesday as investors reacted to signs of easing global trade tensions and weaker U.S. job data. The U.S. reported a drop in private payrolls for the first time in over two years, raising concerns about the broader jobs report due Thursday. Meanwhile, the U.S. announced a lighter-than-expected tariff on Vietnamese goods, boosting market optimism. Rising oil prices—important for Canada’s economy—also supported the loonie. However, Canada’s manufacturing sector continued to weaken, and bond yields climbed as markets reopened after the Canada Day holiday.

Conclusion

Markets are bracing for a busy Thursday with several high-impact economic releases on the calendar, including Switzerland’s monthly inflation data and two key U.S. indicators: the Nonfarm Employment Change and ISM Services PMI. These events come at a pivotal moment for the USDCAD pair, which has declined over 8% since peaking in early February. As both fundamental and technical signals evolve, traders will be closely monitoring incoming data for signs of trend continuation or potential reversal.