• USD/CAD advances during the day face resistance at the 50-day EMA at 1.2857.
• Falling oil prices and sentiment weighed on the Canadian dollar, a tailwind for the USD/CAD.
• USD/CAD Price Analysis: A break above the 50-day EMA might clear the way to 1.3000; otherwise, 1.2800 is eyed.

The USD/CAD climbs and trims some of Wednesday’s losses, as sentiment is mixed after US House Speaker Pelosi’s trip to Taiwan, increasing regional tensions. China’s military drills commenced as expected, with the country firing missiles in its biggest test in two decades.

After hitting a daily low at 1.2820 and rallying towards 1.2876, a daily high, the USD/CAD is trading at 1.2858, up by 0.18%.

USD/CAD rises on sentiment and on CAD weakness

Sentiment is fragile, as abovementioned. EU and US equities fluctuate, while the greenback is soft, trading at 106.200, down 0.30%, underpinned by falling US bond yields. US employment data, namely the Initial Jobless Claims for the week ending on July 30, rose 260K a thousand more than estimated, indicating that the labor market is easing. The trend will likely continue as the Federal Reserve extends its tightening cycle.

At the same time, the  US Balance of Trade deficit narrowed from -$80.1 billion forecasts to -$79.6 billion in June. Exports increased to $260.8 billion, while imports rose to $340.4 billion as expected.

On the Canadian side, the country’s trade surplus widened to C$5.05 billion in June, more than the C$4.8 billion estimated, bolstered by energy products climbing 3.2%, reaching a record high.

In the meantime, falling crude oil prices left the Canadian dollar exposed to further selling pressure as investors sought safety.

What to watch

The Canadian economic docket will update employment conditions in the country, with analysts expecting an increase of 20K jobs added to the economy in July and the Unemployment Rate at 5%. The US economic calendar will feature July’s Nonfarm Payrolls estimated at 250K, less than June’s 372K. The Unemployment Rate is expected to persist unchanged at 3.6%.

USD/CAD Price Analysis: Technical outlook

The USD/CAD has been seesawing with the 50-day EMA in the last three days. Although buyers are in control, per the long-term daily EMAs residing below the spot price, they will face strong resistance at the confluence of the August 3 high and the 20-day EMA at 1.2907, which, if broken, could send the major to test the 1.3000 figure. Otherwise, a fall towards 1.2800 and further, eyeing the 100-day EMA at 1.2779, is in the cards.