The US dollar remains in high demand, causing the USDCAD to gain momentum near the 1.3642 level.

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• USD/CAD gains ground near 1.3642 amid the US Dollar demand.

The pair currently trades last at 1.36426.

The previous day high was 1.3677 while the previous day low was 1.3623. The daily 38.2% Fib levels comes at 1.3643, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3656, expected to provide resistance.

The USD/CAD pair gains momentum below the mid-1.3600s during the early Asian trading hours on Thursday. Meanwhile, the US Dollar Index (DXY) hovers around 104.85, retreating from 105.00 following the release of the US ISM Services PMI. The major pair currently trades near 1.3642, up 0.04% on the day.

On Wednesday, the Bank of Canada (BoC) maintained its key overnight interest rate unchanged at 5%, as anticipated by the market. The BoC Governing Council stated that the central bank leaves the door open for another rate rise as core inflation measures remain elevated. BoC policymakers added that the economy has entered a period of slower expansion, which is required to alleviate inflationary pressures.

About last week’s data, Canadian real Gross Domestic Product (GDP) Annualized for the second quarter contracted at 0.2% YoY against the previous reading of 2.6%. The growth number was worse than expected with a 1.2% expansion. Meanwhile, the rally in oil prices might lift the Loonie as Canada is the largest exporter of crude to the US.

On the other hand, the US Dollar edges higher amid the cautious mood in the market as investors await China’s Trade Data. Meanwhile, markets expect the Federal Reserve (Fed) will keep interest rates over 5% for a longer period. The Federal Reserve (Fed) Governor Christopher Waller stated that they have further room to increase interest rates, but the data will determine whether the Fed needs to hike rates again and if it is done hiking rates.

Data released from the Institute for Supply Management (ISM) showed on Wednesday that the US ISM Services PMI rose to 54.5 in August from 52.7 the previous month, above the market consensus of 52.5. This figure is the highest since February. Furthermore, the S&P Global Composite’s final readings fell to 50.2 in August from 50.4 in July.

Looking ahead, the weekly US Initial Jobless Claims, quarterly Nonfarm Productivity data, and Unit Labour Costs for the second quarter (Q2) will be released. On the Canadian docket, Canada’s labor market data for August will be closely watched. The Unemployment Rate is expected to rise 5.6%. These data could give a clear direction for the USD/CAD pair.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3644 at the time of writing. Pair opened at 1.3636 and is trading with a change of 0.06 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3547, 50 SMA 1.3371, 100 SMA @ 1.3402 and 200 SMA @ 1.3465.

The previous day high was 1.3677 while the previous day low was 1.3623. The daily 38.2% Fib levels comes at 1.3643, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3656, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.3613, 1.3591, 1.3559
• Pivot resistance is noted at 1.3668, 1.37, 1.3722

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