USD/CAD - Keep An Eye 0.9960/65 For Tomorrow's Canada & US employment Reports

The Loonie has slowly grinded higher relative to the USD over the past few weeks (thus USD/CAD lower) alongside the strong 'risk' rally during the month on January. However, USD/CAD is approaching a key technical convergence zone around 0.9960/65 -; Sees the 200-day sma (blue) as well as the 1:1 equidistant measured move (grey). Consequently, this could make for an ideal time for the USD to make a late-round comeback and KO the CAD. However, daily RSI has already broken below the key 40 level which is a potential blow to a USD recovery.

Perhaps the catalyst to such a move could come as early as tomorrow when we receive the all-import Canadian (7:00am ET) and US (8:30am ET) Jan. Employment figures:

• Canada Jan. Net Change in Employment - Consensus +22K
• Canada Jan. Unemployment rate - Expected 7.5%
• US Jan. NFP - Con. +140K (Private Payrolls exp. +160K)
• US Jan. Unemployment rate - Expected 8.5%
  

Either of these two economic announcements, should they come in significantly above/below their consensus, has the capability to move USD/CAD rather dramatically within minutes - As a result they are must watch news events. From a technical perspective, while the pair remains above the 0.9960/65 level you may want to keep an eye on the key pivot around 1.0070/80 as a potential area of resistance. Meanwhile, a break below could see a move towards the prior low from October around 0.9890/95 initially.