USD/CAD: a more meaningful correction the loonie to come?

Currently, USD/CAD is trading at 1.3444, up 0.00% on the day, having posted a daily high at 1.3468 and low at 1.3425.

USD/CAD has managed to make back some ground in thin trade today with a double holiday in the U.S./U.K. "Domestic risk appears set to dominate throughout the week as market participants look to Wednesday’s Q1 GDP and Friday’s international merchandise trade data. GDP expectations are particularly elevated, with a median Bloomberg survey estimate of 4.2% QoQ annualised," explained analysts at Scotiabank.

The nonfarm payrolls will have the last say though and could even determine the greenback's fate until the FOMC meeting in June. Markets continue to expect a rate hike and that has been priced into the dollar already. However, a solid nonfarm payrolls result is also expected while a negative surprise could really derail the dollar and set-off a deeper and more convincing recovery int he Candian dollar.

USD/CAD levels

USD/CAD: Riding downtrend channel: "In the longer term, there is now a death cross with the 50 dma crossing below the 200 dma indicating further downside pressures," explained Yann Quelenn at Swissquote Bank SA.

For the time being, analysts at Scotiabank argue that the USD/CAD short-term technicals are bearish with momentum signals and DMI’s are confirming the trend:

"We highlight the near-term importance of converging trend lines—specifically the descending trend line off the December-March highs and the ascending trend line off the FebruaryApril lows. The latter halted last week’s USDCAD decline, forcing a short-term bounce from the upper 1.33 area," explained the analysts, adding, "a break would likely see a push toward the lower 1.33s, specifically the 1.3312 level representing the 38.2% Fibo retracement of the January-May 2016 decline. Near-term resistance is expected above 1.3480."