USDCAD Closes March Price Gap: Is There Room for Further Downside?

The USDCAD continued its downtrend, closing the March 9 price gap on the daily chart as a double dose of good news for the Canadian Dollar hit the markets. Canada Employment change posted an unexpected upside surprise, showing addition of 289.6K jobs (versus the consensus of -500K and previous of -1993.8K), with a 13.7% unemployment rate (versus 15.0% consensus and 13.0% recorded previously) to send the USDCAD 0.55% lower. 

Furthermore, the Ivey PMI in Canada staged a sharp rebound in May 2020, recovering to 39.1 (consensus 30.8) from a previous figure of 22.8. This rebound was mainly due to the recovery in the Employment Index, which rose from 22.9 to 41.9. The Inventories and Prices indices also climbed from 34.5 to 46.8 and from 51.2 to 54.9, respectively. Crude oil prices also advanced towards the $42 mark on the day, giving the Canadian Dollar one of its best days in the year. 

As at the time of writing, the USDCAD was trading at 1.34171. 

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Technical Outlook for the USDCAD

The pair succeeded in closing the March 9 price gap and pushed all the way down to the 1.33821 support level, before bouncing off it to its current levels. Further strengthening of the CAD on the day could send the pair on a retest mission of that support line. A breakdown of that support allows the pair to aim for the 1.33487 support. Below this area, 1.32974 and 1.32254 have a good chance at becoming relevant targets within the context of a further decline on the USDCAD.

On the flip side, failure to break the 1.33821 support may provide an opportunity for a pullback towards the 1.34656 price level, where the 200-day moving average also resides. If the pullback leads to further advance above this level, 1.35499 and 1.36961 could become relevant resistance targets. However, the bias on the pair is for the downside move to continue. Any price uptick may become suitable opportunities for those seeking to sell on any rallies.

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