The Canadian Dollar (CAD) dipped by 0.05% against the US Dollar (USD) on Thursday, adding to a 1.5% drop since hitting a 15-month high last week. In early February, the CAD fell by 0.4%, bringing USD/CAD back to the 1.3700 area. Negative US employment data has dampened market sentiment, and traders await key Canadian labor figures while US Nonfarm Payrolls data is postponed until next Wednesday.

Technical Analysis and Trends

Current technical analysis shows USD/CAD at 1.3671. It remains below both the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bearish trend. The 50-day EMA sits at 1.3779, and the 200-day EMA is at 1.3862, acting as resistance. Stochastic indicators have rebounded to 38.48, suggesting that while momentum is stabilizing, the outlook remains bearish unless the price closes above the 50-day EMA. A close above this level could change the current trend, but staying below it keeps the downward pressure. Several factors influence the CAD, including interest rates from the Bank of Canada, oil prices, overall economic health, inflation, and trade balance. Generally, higher oil prices and rates support CAD demand. Macroeconomic indicators like GDP, employment stats, and consumer sentiment also play crucial roles, with stronger reports potentially leading to higher interest rates. Given the recent recovery in USD/CAD from lows seen back in October 2025, we should prepare for ongoing weakness in the Canadian Dollar. The pair has risen back into the 1.3700 area, and current momentum seems to favor the USD. Therefore, it’s wise to take advantage of any strengthening of the Loonie over the next few weeks. Recent Canadian labor market figures support our cautious view on the CAD. The report revealed that Canada’s unemployment rate unexpectedly rose to 6.3%, with only 8,000 jobs added, significantly below the anticipated 15,000. This weak data gives the Bank of Canada little incentive to adopt a more aggressive monetary stance, putting pressure on the currency. Additionally, the price of Western Canadian Select (WCS) oil, which strongly impacts the Loonie, has decreased by 4% over the past month, trading near $72 a barrel. This decline is attributed to higher-than-expected global inventory levels. Historically, when oil prices weaken, as seen in 2025, the CAD tends to underperform, a trend we expect to continue.

Impact of Delayed US Nonfarm Payrolls

With the vital US Nonfarm Payrolls data delayed until next Wednesday, there is a cloud of uncertainty affecting investor sentiment. This delay might create an opportunity since short-term volatility options could be underpriced. We see this as a chance to position ourselves for a potential spike in the pair following the US employment report. Technically, a bearish outlook for the CAD is supported as USD/CAD is capped by its 50-day moving average at about 1.3779. This level should be regarded as a key point to start or increase short positions on CAD. Buying near-term USD/CAD call options with strike prices just below this resistance level is a way to limit risk while aiming for further gains. It’s also critical to hedge against a sudden market reversal. A surprisingly weak US jobs report could lead to a sell-off of the USD. Acquiring inexpensive, out-of-the-money put options with a strike price around 1.3550 could offer solid downside protection. This tactic allows us to uphold our primary view while managing risks surrounding next week’s significant event. Create your live VT Markets account and start trading now.

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