The USD/CAD currency pair on Friday extended the current 2-day rebound above the 1.2730 level following the latest round of US data. The currency pair appears to have found strong support around the 1.2600 level. It continues to trade within a gently descending channel formation in the 60-min chart.

The pair is now pinned above both the 100-hour and the 200-hour SMA lines. It has also rallied to cross into the overbought levels of the 14-hour RSI. This could trigger a short-term pullback.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in both the US and the Canadian markets. On Friday, the preliminary US Markit manufacturing PMI for January beat the expectation of 56.5 with 59.1. The Markit Services PMI for the period also outperformed 53.6 with 57.5 while the PMI composite improved to 58 up from 55.3 in the previous reading. 

On Thursday, the US initial jobless claims for the week ending Jan. 15 beat the expectation of 910k with 900k. The continuing claims for the preceding week also outshone 5.4 million with 5.054M. On the other hand, housing starts and building permits for December outperformed the (MoM) expectations of 1.56M and 1.604M with 1.669M and 1.709M, respectively.

In Canada, the BoC chose to keep the base interest rate unchanged at 0.25% on Thursday. The BoC’s core CPI for December came in at 1.5% versus an expectation of 1.2% (YoY). The (MoM) equivalent came short of expectations with -0.4% versus -0.2%. 

USD/CAD Technical Analysis (the 60-min Chart)

Technically, the USD/CAD currency pair appears to be trading within a gently descending channel formation in the 60-min chart. The pair recently found support around the 1.2600 level, which sparked a rebound.

The bulls will be looking to stretch the current rebound by targeting profits at around 1.2779 or higher to 1.2830. On the other hand, the bears will look to pounce for short-term profits at around 1.2680 or lower at 1.2630.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to be trading within a sharply descending channel formation. This indicates a strong long-term bearish bias in the market sentiment.

The bulls will be targeting long-term rebound profits at around 1.2884 or higher at 1.3103. On the other hand, the bears will target long-term pullbacks at around 1.2538 or lower at 1.2306.