USD/CAD Holds Below 1.3650 Amid Soft Oil and US Data

Key Moments

Pair Trades Soft as Conflicting Drivers Limit Direction

During early European dealings on Wednesday, USD/CAD continues to edge lower for a second consecutive session, trading beneath the mid-1.3600 zone. The decline, however, shows limited follow-through, reflecting conflicting influences on the pair.

The US Dollar struggles to attract meaningful buying interest amid expectations for additional interest rate reductions by the US Federal Reserve. At the same time, weaker Crude Oil prices are pressuring the commodity-linked Canadian Dollar, offering some support to USD/CAD and preventing a deeper slide.

Technical Picture: Bias Tilts Bearish but Momentum Is Fragile

From a chart perspective, the pair’s inability this week to sustain gains near the 1.3700 area – which aligns with the 50% Fibonacci retracement of the January decline – followed by a subsequent pullback, points to a tilt in favor of sellers.

On the 4-hour timeframe, the 200-period Simple Moving Average is sloping modestly lower, with the spot rate trading close to this level. This configuration underscores a fragile short-term outlook, where the trend bias leans lower but lacks strong conviction.

The Moving Average Convergence Divergence (MACD) indicator remains below its Signal line, while the MACD histogram is slightly negative and narrowing near the zero line. This combination indicates that bearish pressure is present but appears to be easing.

The Relative Strength Index stands at 43, below the neutral 50 mark, reinforcing a cautious tone but not signaling oversold conditions. As a result, the market appears vulnerable to further downside if support levels fail, yet also susceptible to short-lived corrective rebounds.

European Update: #USDCAD is trying to build a base at 1.3650.

After its trip down to the support zone that runs from 1.3500-1.3460's, we've made an impressive bounce all the way back to 1.3700.

An important aspect of this rally is that it got back above the big 1.3650 level and… pic.twitter.com/mdRiMpOC4z

— Forex Analytix (@forexanalytix) February 3, 2026

Key Technical Levels in Focus

The 38.2% Fibonacci retracement level at 1.3651 currently acts as immediate resistance. A clear move above this threshold could open the way toward 1.3704, which corresponds to the 50% retracement level and is expected to limit any recovery attempts.

If the pair fails to break decisively above this resistance band, rebounds are likely to remain shallow. In that case, traders will pay close attention to whether USD/CAD can hold above the 200-period SMA on the 4-hour chart to avoid renewed downside pressure.

(The technical analysis of this story was written with the help of an AI tool.)

ADP Employment Change: Upcoming Data Point for USD Traders

The ADP Employment Change is a measure of private-sector employment in the United States, published by Automatic Data Processing Inc., the largest payroll processor in the country. It tracks changes in the number of privately employed workers. In general, an increase in this indicator is associated with stronger consumer spending and supports economic growth. Consequently, a higher reading is typically considered bullish for the US Dollar, while a lower reading is viewed as bearish.

Why ADP Data Matters for FX Markets

Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.