Forex Technical Update

USD/CAD 4H Chart 8/3/2012 9:40AM EDT

USD/CAD 8/3/2012 1H chart

The NFP report was better than expected, best in 5 months in fact. This helps the CAD because its economy is closely tied to the US's. The dynamic for the USD however is not as clear. This is somewhat of a risk-on event so it actually hurts the USD from the perspective of the market pulling out of safe haven into more risky assets when there's risk appetite.

This is shown in the first reaction in the USD/CAD following today's (8/3) NFP release. It was rallying briefly ahead of the NFP, and then fell sharply after the data came out, falling from 1.0030 to parity - 1.00.

So far at 9:40AM EDT, the market has respected this area even though it cracked it slightly. A couple of candles closing below 1.00 in the 1H chart would be a sign of bears winning. The market has defended this psychological level well this week, as well as made new highs.

Considering the fact that before this week the market was in a short-term downtrend, the technical picture is basically neutral, with a break below 1.00 to introduce new bearish outlook toward  the 0.98 2012 low.

USD/CAD Daily Chart 8/3/2012 9:45AM EDT

USD/CAD 8/3/2012 Daily chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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