(MENAFN- Daily Forex)

• USD/CAD remains constrained as the 50-day EMA and the 1.40 level cap upside momentum, while the pair rests on the 200-day EMA.
• Traders await Canadian employment data and next week's expected Federal Reserve rate cut for directional clarity.

The US dollar initially rallied against the Canadian dollar during the trading session on Thursday, but it has given back those gains as the 50-day EMA looks to be a bit of a barrier. If we can break above the 50-day EMA and by extension, the 1.40 level, then I think the US dollar will pick up momentum. Ultimately, though, I think a lot of this comes down to the idea that the Federal Reserve is cutting rates next week, or at least the market expects them to.

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And of course, that helps with the interest rate differential. That being said, keep in mind that Friday has the Canadian employment numbers coming out, and that could have a big effect on what happens next as well. With this, I think you have to look at the market through the prism of one that is going to remain very choppy. And it is probably worth noting that we are sitting right on top of the 200-day EMA, which obviously has a certain amount of influence in and of itself. I don't have any interest in shorting this pair, at least not yet.

EURUSD Chart by TradingView

I think the reality of the next move will present itself during the FOMC press conference after the interest rate decision on Wednesday of next week. Between now and then, I would expect a lot of choppy sideways behavior, and we are getting close to the bottom of the range, so weak Canadian jobs numbers might be exactly what it takes to turn this thing around and start heading back towards the top of the box that we have been in over the last two months.

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