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The USD/CAD pair dropped in the short term as the Dollar Index crashed. Now, the index turned to the upside, that's why the currency pair is trying to rebound and recover after its sell-off. Despite the strong drop, the price maintains a bullish bias.
Fundamentally, the USD is struggling to gain ground versus its rivals as the US Unemployment Claims indicator came in at 228K in the last week versus 236K expected, while Core PCE Price Index increased by 0.2% growth matching expectations.
Furthermore, Chicago PMI and Personal Spending came in better than expected as well. On the other hand, the Canadian Current Account was reported at -6.6B versus -11.1B expected, but below the -3.2B in the previous reporting period.
Tomorrow, the US Non-Farm Payrolls, ISM Manufacturing PMI, Unemployment Rate, Average Hourly Earnings, and the Canadian GDP should bring sharp movements.
As you can see on the H1 chart, the USD/CAD pair dropped below the uptrend line after the rate failed to reach and retest the upside line.
Now, it stands right above the 23.6% (1.3511) retracement level and above the key former low of 1.3509. Staying above these levels, the rate could come back to test and retest the broken uptrend line.
A valid breakdown below 1.3509 activates more declines. This scenario brings new short opportunities. The downside scenario could be invalidated if the rate jumps and stabilizes above the uptrend line and above the pivot point of 1.3580.
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