USD/CAD Tests Key Resistance Ahead of Fed Minutes and Canada Jobs Data

USD/CAD has surged from 1.3730 to 1.4292, testing the 61.8% retracement level of the previous decline from 1.4791 to 1.3480. This rally, driven by yield differentials rather than oil prices, has brought the pair to a critical juncture ahead of key economic events.

The next move in USD/CAD will be influenced by two major events: the FOMC minutes on Wednesday and the Canadian jobs report on Friday. The FOMC minutes, covering a meeting before the recent weak US jobs data, could either reinforce market expectations of further tightening or signal a more restrained approach, potentially impacting US yields and USD/CAD.

Friday’s Canadian employment report is another pivotal factor. A weaker-than-expected print, particularly if unemployment rises above 6.6%, could strengthen the case for a break above 1.4290. Conversely, a strong rebound in jobs, around +30k or more, might support a pullback in USD/CAD.

Technically, the pair is stretched but not yet topping. A break above 1.4290/1.4292 would extend the rally toward 1.4497 and keep the 1.4791 high in sight. However, a sustained break below 1.4200 would signal a short-term top, with potential downside toward 1.4077.