• EUR/CAD rebounded strongly after underwhelming U.S. nonfarm payrolls data sharply increased market expectations for Federal Reserve rate cuts.
• The softer labor market figures weighed on the dollar, giving the euro a strong upward push.
• Today’s U.S. employment report showed a marked slowdown in job growth for July, casting doubt on the persistence of inflation pressures recently highlighted by Fed Chair Jerome Powell.
• The softer than-expected data prompted rate markets to price in a near-certain Fed rate cut in September up sharply from a 45% probability before the release.
• Technical signals are bullish as RSI is heading up at 51, daily momentum studies 5,9 and 11 DMAs are trending north.
• Immediate resistance is located at 1.5969(SMA 20), any close above will push the pair towards 1.6125(23.6%fib).
• Support is seen at 1.5759(38.2%fib) and break below could take the pair towards 1.5741(Lower BB).
Recommendation: Good to buy around 1.5920, with stop loss of 1.5850 and target price of 1.6050
