FXStreet reports—During Asian trading on Thursday, the USD/CAD pair declined for the second consecutive trading day, trading near 1.3950. Democratic control of the U.S. Congress weighed on the dollar, while a pullback in oil prices dampened the performance of the commodity-linked Canadian dollar; resilience in U.S. employment data keeps a high probability of a Fed rate hike in December, with markets awaiting initial jobless claims and the non-farm payrolls report for directional cues.
CoinTelegraph APP reports — During the Asian trading session on Thursday, the USD against the CAD continued its downward trend, marking two consecutive trading days of decline, currently trading at 1.3950. With Democrats gaining control of both the Senate and the House in the U.S. midterm elections, markets priced in expectations of a policy deadlock in Washington, leading to concentrated selling of the USD, which became the primary driver pressuring this currency pair. Market expectations that a Democratic-controlled Congress would push for de-escalation of U.S.-Iran tensions caused crude oil prices to slide toward a one-month low.
However, there is a clear balancing mechanism within the market. Weakness in crude oil directly weighs on the Canadian dollar, which is closely tied to energy exports, limiting downward pressure on USD/CAD. Crude oil exports from the Persian Gulf are beginning to recover, resulting in short-term supply exceeding demand, compounded by congressional intent to reduce funding for military operations in the Middle East—multiple factors collectively pressuring oil prices. Nevertheless, tensions between the U.S. and Iran remain uncertain, and geopolitical risks have not been fully eliminated.
U.S. employment data demonstrated economic resilience: ADP's private sector job growth for October came in at 86,000, exceeding the market expectation of 69,000, while September's figure was revised down from 90,000 to 86,000; the ISM services PMI edged slightly lower to 54.5, just below expectations but still remaining in expansion territory. The CME FedWatch tool shows the market pricing in an 82% probability of a rate hike in December, providing underlying support for the U.S. dollar.
Scotiabank strategists noted that despite a favorable external environment for risk assets, the Canadian dollar has underperformed compared to other major non-US currencies, exhibiting low-beta characteristics typical of commodity currencies and rising more conservatively even in positive conditions. Next, the market will focus on US initial jobless claims data, while the non-farm payrolls report on Friday will be the most important risk event of the week, likely to recalibrate Fed policy expectations and drive the short-term direction of USD/CAD.
On the daily chart, USD/CAD has retraced to test the 200-day simple moving average at 1.3893, coinciding with the 61.8% Fibonacci retracement level at 1.3947—this zone forms a key confluence of support. Price remains above this support for now, maintaining a modest bullish bias in the short term. A valid break below 1.3947 would open the way toward the 78.6% retracement at 1.3852 and the significant structural low at 1.3731; sustained selling pressure would significantly undermine the bullish outlook. On the upside, the first resistance lies at the 50% Fibonacci retracement at 1.4013, followed by the 38.2% retracement at 1.4080 and the cycle high at 1.4296. Only a sustained close above 1.4013 would reignite upward momentum. On the 4-hour chart, price momentum has shifted lower, with indicators retreating into neutral territory without showing deep oversold conditions. The market remains in a state of indecision, influenced by联动 movements in the US dollar and crude oil, awaiting catalysts from upcoming US employment data to determine direction.
Editor's Summary
The USD/CAD is caught between two opposing forces: a Democratic victory weakening the dollar, while falling oil prices weigh on the Canadian dollar, and resilient U.S. employment supports expectations of Fed rate hikes, causing the pair to oscillate near key support. Short-term risk lies in a stronger-than-expected NFP report driving a rebound toward resistance; a potential opportunity arises if employment data falls short of expectations, breaking below the confluence support to open downside space. Key levels to watch: support at 1.3947 and resistance at 1.4013. Volatility will expand during the NFP window—wait for directional confirmation.
However, there is a clear balancing mechanism within the market. Weakness in crude oil directly weighs on the Canadian dollar, which is closely tied to energy exports, limiting downward pressure on USD/CAD. Crude oil exports from the Persian Gulf are beginning to recover, resulting in short-term supply exceeding demand, compounded by congressional intent to reduce funding for military operations in the Middle East—multiple factors collectively pressuring oil prices. Nevertheless, tensions between the U.S. and Iran remain uncertain, and geopolitical risks have not been fully eliminated.
U.S. employment data demonstrated economic resilience: ADP's private sector job growth for October came in at 86,000, exceeding the market expectation of 69,000, while September's figure was revised down from 90,000 to 86,000; the ISM services PMI edged slightly lower to 54.5, just below expectations but still remaining in expansion territory. The CME FedWatch tool shows the market pricing in an 82% probability of a rate hike in December, providing underlying support for the U.S. dollar.
Scotiabank strategists noted that despite a favorable external environment for risk assets, the Canadian dollar has underperformed compared to other major non-US currencies, exhibiting low-beta characteristics typical of commodity currencies and rising more conservatively even in positive conditions. Next, the market will focus on US initial jobless claims data, while the non-farm payrolls report on Friday will be the most important risk event of the week, likely to recalibrate Fed policy expectations and drive the short-term direction of USD/CAD.
On the daily chart, USD/CAD has retraced to test the 200-day simple moving average at 1.3893, coinciding with the 61.8% Fibonacci retracement level at 1.3947—this zone forms a key confluence of support. Price remains above this support for now, maintaining a modest bullish bias in the short term. A valid break below 1.3947 would open the way toward the 78.6% retracement at 1.3852 and the significant structural low at 1.3731; sustained selling pressure would significantly undermine the bullish outlook. On the upside, the first resistance lies at the 50% Fibonacci retracement at 1.4013, followed by the 38.2% retracement at 1.4080 and the cycle high at 1.4296. Only a sustained close above 1.4013 would reignite upward momentum. On the 4-hour chart, price momentum has shifted lower, with indicators retreating into neutral territory without showing deep oversold conditions. The market remains in a state of indecision, influenced by联动 movements in the US dollar and crude oil, awaiting catalysts from upcoming US employment data to determine direction.
Editor's Summary
The USD/CAD is caught between two opposing forces: a Democratic victory weakening the dollar, while falling oil prices weigh on the Canadian dollar, and resilient U.S. employment supports expectations of Fed rate hikes, causing the pair to oscillate near key support. Short-term risk lies in a stronger-than-expected NFP report driving a rebound toward resistance; a potential opportunity arises if employment data falls short of expectations, breaking below the confluence support to open downside space. Key levels to watch: support at 1.3947 and resistance at 1.4013. Volatility will expand during the NFP window—wait for directional confirmation.