The USD/CAD currency pair plunged on Friday afternoon (GMT) after the US labor market showed weakness following the latest non-farm payrolls data. The pair dropped from weekly highs of about 1.3430 to trade at 1.3298. This the lowest it as reached since mid-April of this year.

The currency pair has been trading within a sideways channel recently but this week’s downward movement continued to new lows, which triggered a breakout from the channel trend. It is now testing new support, which could be the key to the next rebound.

USD/CAD Fundamentals Overview

On Friday, the US non-farm payrolls massively fell below expectations triggering a huge sell-off in the USD/CAd currency pair. Analysts had forecasted a US Jobs data of about 185,000 new jobs, but the report showed that only 75,000 jobs were created last month.

The unemployment rate remained flat at 3.6% but wage growth missed expectations with 0.2% compared to 0.3% forecast. Now, traders will look forward to Baker Hughes US Oil Rig Count later in the day to gauge the strength of the loonie which relies a lot on oil prices.

Oil prices rebounded yesterday after reports emerged saying the US might delay hitting Mexico with tariffs. This gives the loonie more upside potential going into next week.

USDCAD Technical Analysis (the 240-min Chart)

From a technical perspective, the pair had been trading within an ascending wedge before the latest pullback seemingly pushed it down and out of the wedge. This creates interesting trading opportunities for both the bulls and the bears.

The bulls will target profits at around 1.3345 in anticipation of an immediate rebound while the bears will hope that the decline continues towards 1.3268 or even lower to the 1.3200 level.

EUR/CHF Technical Analysis (the Daily Chart)

In the daily chart, the pair’s recent pullback pushed it to trade between the 100-day and the 200-day moving average lines, which suggests that the downward momentum could take it lower.

Furthermore, the USD/CAD currency pair is yet to reach the oversold zone in the Relative Strength Index and this supports a bearish bias in the short-term. But generally, the bulls will claim control over the long-term due to the pair’s movement in an ascending channel pattern.

In summary, the USD/CAd currency pair dropped to new multi-week lows on Friday after a weak NFP data. And with the technicals showing that there is more room down below, the bears will claim control in the short-term while the bullish bias will hold in the long-term.