USD/CAD at Key 200DMA as CPI and Jobs Data Set Direction

USD/CAD is sitting near the important 200-day moving average after breaking its bullish trend earlier this week, making today’s US inflation data and Canada jobs report key for the next move. A stronger US CPI together with weak Canadian employment would likely push the pair higher, while softer US inflation and stronger Canada jobs data could send it lower.

Canada’s previous jobs report showed a sharp drop in employment and rising unemployment, and markets are watching whether this weakness continues. Another weak report may support expectations that the Bank of Canada stays cautious, which could pressure the Canadian dollar. A stronger report could do the opposite and support the loonie.

On the US side, inflation is expected to rise mainly because of higher energy prices. If inflation spreads into core services, markets may start pricing possible Fed rate hikes instead of cuts, which would support the US dollar.

Beyond data, US-Iran peace talks are another major factor. Progress in negotiations may strengthen the Canadian dollar, while any setback could support the US dollar.

Technically, the 200-day moving average is the key level. A move below it could open the way toward 1.3800, 1.3750, and 1.3670. If the level holds, resistance is near 1.3860 and then 1.3946 becomes the next upside focus.

USD/CAD Daily Chart