A move above the June highs around 1.4250 could accelerate the USD/CAD rally, with the pair's resilience after weaker US jobs data suggesting the bulls remain in control. With the Fed focused on inflation and elevated oil prices keeping pressure on bond markets, I still think the near-term USD/CAD forecast is tilted to the upside.
Key takeaways
- June highs remain the hurdle for renewed momentum.
- Inflation matters more than employment for the Fed's current focus.
- The bullish lean remains conditional, not a confirmed breakout.
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Weak jobs data has not changed the dollar argument
The US dollar initially fell a little after the weaker-than-expected jobs report. However, this followed other disappointing numbers during the week, and I have my doubts about whether the greenback will fall much further. The key question is whether weaker activity changes the monetary policy backdrop.
The report has modestly lowered expectations that the Fed will hike again next month. But its focus remains firmly on the inflation mandate rather than employment. That leaves a softer jobs number offering some relief without necessarily removing the reasons for the dollar's recent strength.
Elevated oil prices keep yields in focus
Oil prices have surged in recent months and remain elevated. Inflation should therefore remain sticky for a while yet, keeping pressure on bond markets and yields higher. This is the mechanism that makes a sustained dollar decline harder to argue for, despite the weaker economic numbers.
Attention will now gradually shift towards the US CPI release on 14 October 2026. Meanwhile, risk appetite has been all over the place, providing additional support for the dollar. The inflation outlook and uncertain appetite for risk remain important parts of the backdrop against which USD/CAD is holding up.
Technical USD/CAD forecast and key levels to watch
From a technical analysis point of view, the strength of the rally stands out, with minimal pullbacks along the way. USD/CAD dipped only slightly after the jobs report before bouncing back and turning higher on the session. Yesterday's inverted hammer against the June highs may therefore have trapped the bears. A move through that resistance would bring yesterday's high, also this week's high, at 1.4263 into focus, where stops could help accelerate the move. If the bullish trend continues, the round handles at 1.4300 and 1.4400 could come into view. The 127.2% Fibonacci extension at 1.4388 offers another longer-term reference, not a promise that price will reach it. On the downside, key support comes in around 1.4130, which was previously resistance.
Frequently asked questions
Why has USD/CAD been resilient after weak jobs data?
The small dip and subsequent recovery suggest the disappointing report has not displaced the bullish trend. The dollar's wider backdrop still matters more than that initial reaction.
Could the inverted hammer be a bear trap?
It looks that way for now, but the June highs still need to be overcome. I would distinguish that possibility from a breakout that has already happened.
Why does former resistance matter as support?
It gives the downside a clear reference while attention is on the highs. The bullish case should not obscure the importance of the level below.
