Topside trend line and 50% retracement on the hourly chart also in play
The USDCAD it is trading at a new session high and in the process tests its 100 hour moving average at 1.32031. Just above that level are a topside trend line connecting highs from December 3 and December 11 at 1.3206 and the 50% retracement of the move down from last Friday's postemployment highs. That level comes in at 1.32097.
The price action this week has been steadily to the downside as the shock from the weaker Canada employment data last week faded, as did the shock from the stronger US employment number 1 week ago. Yesterday BOC Gov. Poloz discounted the weak employment number citing one month volatility.
The low price today did extend to the lowest level since November 6, and in the process tested the 61.8% retracement of the move up from the October low to the November high. That retracement level comes in at 1.31505 (see chart below). The low price today extended to 1.31501. The holding and subsequent move back higher and away from the December lows, gave the buyers the confidence to extend higher.
Now with the pair testing resistance levels, look for some lean on profit-taking/risk defining selling. A move above the aforementioned technical levels, could lead to those sellers buying back on the low risk trade.
