The USDCAD currency pair is falling, mainly due to strong Canadian manufacturing sales and a weaker US Empire manufacturing index. Right now, the pair is testing important moving averages: the 100-bar at 1.3814 and the 200-bar at 1.38067. The lowest point this session reached was 1.38144. This area is crucial for both buyers and sellers. Buyers hope to bounce back from this level, while sellers want to break below it to push prices down. Even with the downtrend, the pair has struggled to stay above last week’s swing range of 1.3878 to 1.3917.

Moving Average Support Level

The 200-bar moving average remains a key support level. Watching this area is essential as both buyers and sellers contest control, which can influence future price movements. USDCAD is testing a vital support zone around 1.3810, which has turned into a battleground. This decline is driven by today’s strong Canadian manufacturing data and disappointing numbers from the US. Recent trends show Canadian data holding up well, while US figures are weakening. Sellers are focusing on Canada’s strong August jobs report, which added 45,000 jobs and kept the unemployment rate steady at 5.7%. As a result, the Bank of Canada is keeping a hawkish tone, suggesting that interest rates may remain high. This environment supports a stronger Canadian dollar.

US Market Conditions

In the US, conditions are weaker, affecting the pair negatively. The latest Non-Farm Payrolls report showed only 155,000 new jobs, falling short of expectations. Additionally, inflation data revealed a slight drop to 3.4%. This suggests that the Federal Reserve may pause its interest rate hikes for now. This difference highlights the importance of the 200-period moving average at 1.3806 for traders. If the price breaks below this area, put option volume could increase as traders aim for the 1.3700 mark. On the other hand, a strong rebound could encourage bullish strategies, betting that this long-term support will hold. This 1.3800 level has acted as a solid floor multiple times, especially during the volatility seen in early 2024. A daily close below this support in the next few weeks could signal a strong bearish shift and change the medium-term trend. Additionally, the failure to break above the 1.3900 resistance last week suggests that upward momentum is fading. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now