20-day EMA act as key barrier ahead of Canadian employment data

The USD/CAD pair trades 0.17% lower to near 1.3690 during the European trading hours on Friday. The Loonie pair is under pressure as the US Dollar’s (USD) rally hits pause, following an improvement in market expectations for the Federal Reserve (Fed) reducing interest rates in the March policy meeting.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currency peers, is 0.1% down to near 97.85.

Dovish Fed prospects have revived as the latest batch of United States (US) employment-related data showed signs of continued weakness in the job market.

Meanwhile, the Canadian Dollar (CAD) trades higher ahead of the labor market data for January, which will be published at 13:30 GMT. Statistics Canada is expected to show that the economy created 7K fresh jobs, fewer than 8.2K in December. The Unemployment Rate is seen remaining unchanged at 6.8%.

Investors will pay close attention to the Canadian employment data to get fresh cues on the Bank of Canada’s (BoC) monetary policy outlook.

USD/CAD technical analysis

USD/CAD trades lower at around 1.3690 as of writing. The pair sits beneath the 20-day EMA at 1.3707, and the average edges lower, reinforcing a mild bearish bias. Price action remains capped by this dynamic barrier, keeping rebounds contained.

The 14-day Relative Strength Index (RSI) at 46 (neutral) signals subdued momentum, with buyers yet to reclaim control.

The descending 20-day EMA continues to guide the trend, and a daily close above 1.3707 would improve tone and open a corrective path. Failure to clear the average would preserve downside pressure and keep rallies shallow. RSI below 50 limits upside; a push through that midline would strengthen bullish attempts and shift risk toward recovery.

(The technical analysis of this story was written with the help of an AI tool.)