• The USD/CAD forecast shows market participants weighing employment figures from Canada and the US. 

• The economy added 139,000 new jobs in May.

• Canada reported an unexpected increase in employment of 8,800.

The USD/CAD forecast shows market participants weighing employment figures from Canada and the US. At the same time, traders are gearing up for crucial US inflation figures this week that will shape the outlook for Fed rate cuts. 

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Last week, the US and Canada released upbeat monthly employment figures. In the US, the economy added 139,000 new jobs in May, above the forecast of 130,000. Meanwhile, average hourly earnings jumped, and the unemployment rate held steady at 4.2%. The report led to a decline in Fed rate cut expectations.

Experts were expecting weakness in the US economy due to Trump’s aggressive tariffs. However, the economy has been more resilient than expected so far. As a result, the Fed might now focus more on the state of inflation. 

On the other hand, Canada reported an unexpected increase in employment of 8,800. Estimates had shown the economy losing 11,900 jobs. Meanwhile, the unemployment rate increased to 7.0% as expected. Last week, the Bank of Canada paused rates a second time. If the economy remains strong, policymakers might remain cautious. 

USD/CAD key events today

Market participants do not expect any key economic releases from the US or Canada. Therefore, the pair might consolidate.

USD/CAD technical forecast: Bullish RSI divergence

On the technical side, the USD/CAD price has rebounded to retest a solid resistance zone comprising the 30-SMA and the 1.3701 key level. However, the price still trades below the SMA with the RSI under 50, suggesting a bearish bias. 

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Initially, the price was dropping in a downtrend until it reached the 1.3650 key level. Although this was a new low for the price, the RSI made a higher one, indicating a bullish divergence. Bears were much stronger when they hit the previous low at the 1.3701 level. 

The bullish divergence might allow bulls to take charge for a deep pullback or a reversal. This would mean breaking above the current resistance zone. Such a move would clear the path to the 1.3850 resistance. On the other hand, the downtrend will continue if the resistance holds.

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