Canadian Dollar Forecast: Is USD/CAD Breaking Out Ahead of Jobs Data?

USD/CAD Key Points

• Despite this week’s high-profile meeting between US President Trump and Canadian PM Carney, US tariffs on Canada remain unresolved.
• Canada’s jobs report tomorrow is expected to show an addition of about 3K net jobs and an uptick in unemployment to 7.2%.
• USD/CAD is catching a bid so far today, and a close above the 200-day moving average would go a long way toward confirming a renewed rally.

There are always multiple fundamental crosswinds to navigate with any currency pair, but USD/CAD’s outlook is particularly fraught at the moment.

In addition to the no-end-in-sight US government shutdown, Canada’s Prime Minister Mark Carney and US President Trump met to discuss tariffs earlier in the week…with no immediate resolution. The readout from the meeting was positive, with Trump opining that “We’re going to treat people fairly. We’re going especially treat Canada fairly” and predicting that “The people of Canada will love us again.”

For Canadians in beleaguered industries like autos, steel, and lumber, it’s more a case of “Tariffs and trade restrictions may break my economy, but words will never help me.”

While the US government shutdown has put a hold on most major US data, Canada has no such issues, and tomorrow’s jobs report is expected to show an addition of about 3K net jobs and an uptick in unemployment to 7.2% in The Great White North. After two straight months of declines totalling more than -100K jobs, a positive employment figure out of Canada could reassure traders that are increasingly betting on another interest rate cut from the Bank of Canada later this month (~60% discounted per Bloomberg data).

Canadian Dollar Technical Analysis: USD/CAD Daily Chart

Source: StoneX, TradingView

Turning our attention to the technicals, USD/CAD is broadly holding steady near the 1.40 handle, where it has spent the last week consolidating after hitting its highest level since May. The pair is catching a bid so far today, and a close above the 200-day moving average would go a long way toward confirming a renewed rally toward the 38.2% Fibonacci retracement of the H1 swoon at 1.4015 and, in time, potentially the 50% Fibonacci retracement in the mid-1.4100s.

Canadian Dollar Technical Analysis: USD/CAD Hourly Chart

 

Source: StoneX, TradingView

Zooming in to the hourly chart, USD/CAD’s near-term breakout looks more impressive. As long as the pair can hold above previous resistance in the 1.3980-90 zone for the rest of the day, the near-term technical outlook will remain positive, especially if a third straight negative jobs reading cements a BOC rate cut before Halloween.

-- Written by Matt Weller, Global Head of Research

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