A combination of soft U.S. data and higher crude oil prices have pushed the USD/CAD to 3-year lows this Wednesday. The greenback dropped off its 2-week highs after the 742,000 ADP employment change fell short of the market expectation of 800,000 jobs.
Furthermore, business activity in the U.S. services industry dropped off in April, falling from 63.7 in March to 62.7. Inadequate supply of inputs to meet burgeoning demand is being blamed for the shortfall.
On the other side of the border, the loonie is benefitting from a rise in crude oil prices, which received a boost after a massive decline in US oil stocks. The decision by the Bank of Canada to start tapering their QE program earlier than planned has been a significant tailwind for the CAD, allowing it to gain at the expense of the greenback.
Technical Outlook for USD/CAD
The support level which marks the 22 January 2018 low at 1.22467 is the next available pitstop for bears if the 1.22823 support gives way. Below this level, the next target is the 18 September 2017 low at 1.21708, with 1.20830 serving as an additional target to the south.
On the other hand, a bounce on the 1.22834 support allows the 1.23677 resistance to become a new target, with 1.23998 and 1.23389 serving as additional targets to the north