The dollar continues to hold on to its recent gains, even though its rally appears to be temporarily suspended. The latest non-government employment change numbers bolstered this process. You can read more about the greenback's changing market sentiment from our latest EURUSD analysis.
The November ADP labour market report beat the initial market forecasts, setting up a strong attestation for another robust NFP report on Friday. The better-than-expected employment change data confirmed FED Chair Jerome Powell's Senate testimony from yesterday relating to the current state of the labour market.
Despite this welcoming development, the dollar continued to trade in a range, as can be seen on the 4H USDCAD chart above. The price action appears to have completed a major 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory.
This implies the likely completion of the recent uptrend, which can now be followed by a consolidation of the price action in a tight range. This is further substantiated by the fact that the price action is also behaving as per the expectations of the Wyckoff Cycle method.
The price of the USDCAD is seemingly consolidating within the boundaries of a new Distribution range, spanning between the 23.6 per cent Fibonacci retracement level at 1.27085 and the major resistance level at 1.28500.
Traders should monitor the behaviour of the price action within the lower limit of the range, which is currently converging with the 50-day MA (in green), and the major resistance at 1.27650, underpinned by the 20-day MA (in red). A potential breakdown below this bottleneck could then be followed by a dropdown to the 38.2 per cent Fibonacci at 1.26282, currently converging with the 100-day MA (in blue).
According to the findings of ADP, 534 thousand new jobs were created in November vs 525 thousand expected. This underpins a marginal depreciation in the pace of jobs creation from a month prior when the labour market added 570 thousand new jobs.