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USDCAD bears snapped the ascending trendline after a three-day battle on Thursday, forcefully pushing the price towards the 50- and 200-day simple moving averages (SMAs) and to a two-week low of 1.2539 ahead of the all-important US nonfarm payrolls .

With the RSI dipping below its 50 neutral mark to seek fresh lows, and the MACD decelerating below its red signal line, expectations are for the negative momentum to dominate in the short term.

That said, the upward trajectory from the June low of 1.2006 is still valid despite the depreciation in the past two weeks and only an aggressive selling below the previous low of 1.2421 would disprove it, consequently shifting the spotlight towards the 1.2300 level – being the 61.8% Fibonacci retracement of the latest upleg. For now, the bullish SMA crosses continue to feed hopes for a continuation of the original positive trend.

In the meantime, the bears will also need to knock down the wall of 1.2525 – 1.2477 formed by the 200-day SMA and the 50% Fibonacci to keep the upper hand in the market.

In the event of an upside reversal, the pair could face some challenges between the 38.2% Fibonacci of 1.2588 and the broken supportive trendline, which could switch to resistance around 1.2630. Breaching these barriers, the focus will shift back to the 1.2683 handle and the 23.6% Fibonacci of 1.2725, while higher, a decisive close above 1.2824 would open the door for the 1.2947 peak.

Summarizing, USDCAD is currently exposed to additional negative corrections, though whether the sell-off can forestall the upward trajectory from June lows remains to be seen.

The Euro keeps firm bullish tone and approaching strong barriers at 1.1900 zone (Fibo 38.2% of 1.2266/1.1664 at 1.1894 and July 30 peak at 1.1908).

Break here would confirm reversal and unmask key 1.20 resistance (psychological / 200DMA / daily cloud top).

The pair is on track for the second consecutive weekly advance that adds to positive signals.

Daily techs show rising bullish momentum and MA’s (5;10;20;30;55) multiple bull-crosses that underpin the action.

US non-farm payrolls data are key event on Friday and expected to provide stronger direction signals.

Economists expect non-farm payrolls to maintain positive trend and to rise by 750K in August after the economy added nearly two million new jobs in the past two months, but soaring coronavirus cases, downgraded estimations for Q3 GDP and persisting supply shortages may sour the sentiment and slow employment growth.

Most of analysts expect the August figure to come around or slightly above forecast that would be overall positive, but the negative surprise cannot be ruled out, due to abovementioned factors and downbeat figures from the US private sector, released earlier this week.

The pair is expected to maintain bullish bias while daily cloud base (1.1842, now reverted to solid support) holds, although bulls may face strong headwinds from 1.1900 resistance zone.

Alternatively, return and close below thick daily cloud, would hurt bulls and generate initial signal of recovery stall.

Res: 1.1894, 1.1908, 1.1954, 1.2000.
Sup: 1.1870, 1.1842, 1.1816, 1.1801.

Eurozone PMI Services was finalized at 59.0 in August, down from July's 59.8. PMI Composite was finalized at 59.0, down from 60.2. Looking at some member states, PMI composites were generally strong: Ireland (62.6), Spain (60.6), Germany (60.0), Italy (59.1), France (55.9).

Joe Hayes, Senior Economist at IHS Markit said: "It was another solid result for euro area businesses in August, according to the PMI numbers, which still point to rapid rates of expansion in output and demand.... but a step down since the preliminary 'flash' number tells us that this growth momentum is fading... Regardless, another strong quarter-on-quarter rise in GDP is on the cards for the third quarter, and we're certainly on track for the eurozone economy to be back at pre-pandemic levels by the end of the year, if not sooner."

Full release here.

EUR/USD

Current level - 1.1839

The euro continued its strong uptrend and the pair reached the resistance zone between 1.1880 and 1.1900. These levels come from the higher time frames and it is possible for the strength of buyers to weaken and the trend to enter a range phase. Given that the bulls manage to overcome 1.1900, their next goal will be 1.1950. Potential pullbacks or consolidations should remain limited above 1.1835 in order to maintain the integrity of the trend. Expectations remain positive for the continuation of the rally, and higher targets for buyers are 1.2000 and 1.2090. Today, market activity could rise significantly with the announcement of the non-farm payrolls for the United States and the unemployment rate at 12:30 GMT.

USD/JPY

Current level - 109.86

The pair continues to trade in the range with support at 109.58 and resistance at 110.20. The territory below the resistance 110.40 belongs to the bears and the attempts for the rally are aggressively sold. Expectations, however, remain neutral after the bulls failed to test again the low around 109.11. It is likely that the market expects a catalyst to find a unified direction and a breach of the range would define the pair's subsequent direction.

GBP/USD

Current level - 1.3838

The rally of the Cable gained momentum and reached the resistance zone between 1.3843 and 1.3868. It is possible for prices to pull back towards the main support in the area 1.3800-1.3780. The forecasts remain positive and with a break of the resistance of 1.3868, the rally can be expected to continue towards 1.3930.

Germany PMI Services was finalized at 60.8 in August, down from July's record high of 61.8. PMI Composite also dropped to 60.0, down from July's all-time high of 62.4. Markit said, business activity maintained strong rate of growth.. There was further marked rise in employment as capacity pressures build. Increases in input costs and prices charged were near record.

Phil Smith, Associate Economics Director at IHS Markit said:

"The service sector followed up July's record performance with another sharp increase in business activity in August, and has taken the mantle from manufacturing as the main driver of growth. Although the rate of expansion on a monthly basis looks like it has passed its peak, the scene is already set for strong growth in the third quarter, even if we were to see a further loss of momentum in September.

"The Delta variant is a risk to service sector demand in the near term. But looking further ahead, businesses remain optimistic that conditions will have improved come this time next year, with many still hoping for an end to the pandemic and an associated recovery in travel activity. The steep rebound in activity and strong business confidence about longer-term prospects continue to help drive a rapid pace of job creation, albeit with the rate of employment growth in August easing from July's all-time survey high.

"Price pressures remained historically elevated across the service sector in August, adding to even stronger inflation in manufacturing. Large numbers of services firms continued to hike their prices to cover against rising costs, emboldened by rising demand and growing backlogs of work."

Full release here.

France PMI Services was finalized at 56.3 in August, just slightly down from July's 56.8. PMI Composite was finalized at 55.9, slightly down from June's 56.6 Markit said business activity increased at slowest rate in four months. Employment growth, on the other hand, was at strongest since October 2018. Also, cost inflation was at sharpest rate for over a decade.

Joe Hayes, Senior Economist at IHS Markit said: "The economic recovery in France continued to move along at a solid clip during August. The narrative is essentially unchanged - we're still seeing strong demand, and firms are adjusting their workforces to accommodate growing order books. The rate of jobs growth was at its best in almost three years in August. There's still ample work-in-hand however, so there's clearly scope for further expansions in employment and business activity.

"Business confidence is also proving to be resilient, despite the emergence of the delta variant and steep cost pressures across the economy. Whether the recovery in business activity can push on unchecked amid these risks remains to be seen.

"Nevertheless, based on July and August survey data, France looks set for another solid GDP growth number in the third quarter."

Full release here.

Downside risks dominated the USD/CAD currency pair on Thursday. As a result, the US Dollar declined by 90 pips or 0.72% against the Canadian Dollar during Thursday's trading session.

Given that the exchange rate has breached the 1.2580 support level, sellers are likely to continue to drive the price lower during the following trading session. The potential target for bearish traders will be near the 1.2500 area.

However, technical indicators suggest that the currency exchange rate might trade sideways within this session.

The GBP/JPY currency pair bounced off a support level formed by the 50– hour simple moving average at 151.45 on Thursday. As a result, the British Pound edged higher by 77 pips or 0.51% against the Japanese Yen during yesterday's trading session.

Given that the exchange rate has rebounded from a support level, buyers are likely to continue to drive the price higher within Friday's trading session. The potential target for bulls would be near the 152.67 area.

On the other hand, the currency exchange rate might reverse from the current price level at 152.21 aim for a retest of the 50– hour SMA support level at 151.77.

The 50– hour simple moving average guided the AUD/USD currency pair on Thursday. As a result, the Australian Dollar surged by 52 pips or 0.71% against the US Dollar during yesterday's trading session.

By and large, the exchange rate could continue to trend bullish during the following trading session. A breakout through the upper boundary of an ascending channel pattern could occur.

However, if the channel pattern holds, the currency exchange rate would make a pullback towards the 50– hour SMA at 0.7380 today.

On Thursday, the common European currency edged higher by 42 pips or 0.32% against the Japanese Yen. The currency pair breached the resistance level at 130.40 during yesterday's trading session.

The EUR/JPY exchange rate could continue to edge higher in the ascending channel pattern during the following trading session. The potential target for bullish traders will be near the 131.00 level.

However, the currency exchange rate may reverse from the psychological resistance level at 131.00 within this session.