USD/CAD is testing important support levels near the 200-day moving average and a multi-month channel base around 1.3920/1.3880. If the pair falls below 1.3880, it might drop to 1.3830 and the September low of 1.3770/1.3725. Recent highs around 1.4150 could act as resistance if the pair rebounds. The preliminary Michigan Consumer Sentiment Index for December is expected to rise slightly from November’s three-year low of 51.0 to 52.

Canadian Labour Market Expectations

Statistics Canada will release its Labour Force Survey on Friday, and a weak performance is anticipated. The Unemployment Rate is predicted to rise to 7% in November, while Employment Change is expected to remain steady after gains in October. Pi Network (PI) is down for the third day, approaching a local support trendline. On-chain data shows rising supply pressure as Centralized Exchanges face increased inflows. We are closely monitoring USD/CAD as it tests a crucial support zone between 1.3920 and 1.3880, which represents a multi-month channel base and the 200-day moving average. This level is a critical point for the pair’s direction in the upcoming weeks. Traders should stay alert for a potential breakout. If support at 1.3880 fails, the pair may continue to slide towards 1.3830 and the September 2025 low of 1.3770. Traders expecting weakness in the US dollar may consider buying put options to profit from a decline. The upcoming US Michigan Consumer Sentiment report, projected at a low 52, could trigger this move if it confirms a slowdown in the American economy. However, a rebound from this support is also likely, especially with today’s Canadian Labour Force Survey expected to show weakness. If Canadian unemployment rises to 7%, a level not seen since the economic adjustments of 2022, it could weaken the Canadian dollar and push USD/CAD back toward resistance near 1.4150. Bullish strategies, like call options, would be relevant if the pair maintains this support zone.

Volatility Ahead

Implied volatility is increasing ahead of these key data releases, showing market uncertainty. The persistent US inflation from last month, with a Consumer Price Index of 3.4%, is impacting US consumer confidence. At the same time, the Bank of Canada’s rate cuts earlier in 2024 have yet to produce the desired job growth, resulting in a standoff in the currency pair. Given these mixed pressures from both economies, a non-directional options strategy, like a straddle, could be effective. This strategy would profit from a significant price movement in either direction following the data releases. It essentially bets that the current stability at this key technical level is about to shift sharply. Create your live VT Markets account and start trading now.

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