Current trend

The Canadian dollar is strengthening against positive data from the national labor market published last week, acting as a catalyst for the USD/CAD pair to decline to the area of 1.3575.

Thus, the change in employment amounted to 39.9K, exceeding the forecast of 15.0K and the previous value of -6.4K, and unemployment remained at 5.5%, below expectations of 5.6%. Also, the Ivey Purchasing Managers’ Index (PMI), which measures the state of business activity in the national manufacturing industry, was 53.5 points for August, exceeding the forecast of 49.2 points and the previous value of 48.6 points. Thus, the national currency may continue to strengthen this week, and the USD/CAD pair is likely to correct towards 1.3500.

The long-term trend is downward: quotes unsuccessfully tried to overcome the trend line at 1.3655 but began to decline, which could reach the support level of 1.3500, after which the next sales target will be 1.3367. If the trading instrument consolidates above 1.3655, the long-term trend will reverse upwards, and long positions with the target at the resistance level of 1.3830 are relevant.

The medium-term trend is upward: after the breakdown of zone 2 (1.3557–1.3535), the purchase target is zone 3 (1.3791–1.3768), and the key support moves to 1.3463–1.3442, after reaching which it is worth opening long positions with the targets of 1.3634 and 1.3691.

Support and resistance

Resistance levels: 1.3655, 1.3830.

Support levels: 1.3500, 1.3370, 1.3140.

Trading tips

Long positions may be opened from 1.3500 with the target at 1.3655 and stop loss around 1.3450. Implementation time: 9–12 days.

Short positions may be opened below 1.3450 with the target at 1.3350 and stop loss around 1.3500.