USD/CAD dives to two-month lows, below 1.2500 mark post-US/Canadian jobs data

• USD/CAD broke through its intraday trading range in reaction to the US/Canadian jobs report.
• The headline NFP missed estimates by a big margin and showed an addition of 194K jobs.
• Canadian data smashed expectations and underpinned the loonie amid bullish oil prices.

The USD/CAD pair witnessed aggressive selling following the release of the US/Canadian jobs report and dived to two-month lows, further below the key 1.2500 psychological mark.

Following a brief consolidation, the USD/CAD pair met with some fresh supply on the last day of the week and prolonged its recent bearish trend that has been underway over the past three weeks or so. The US dollar weakened across the board in reaction to the disappointing headline NFP print, which, in turn, was seen as a key factor that exerted heavy pressure on the major.

The US economy created only 194K jobs in September, missing the 500K anticipated by a big margin and overshadowing an upward revision of the previous month's reading to 366K from 235K. Additional details of the report revealed that the unemployment rate fell to 4.8%, or the lowest level since the beginning of the pandemic in March 2020, though did little to impress the USD bulls.

On the other hand, the Canadian employment figures came in better than market expectations and showed an addition of 157.1K jobs in September, smashing even the most optimistic estimates. Moreover, the unemployment rate matched expectations and fell to 6.9% from 7.1%. This, along with bullish crude oil prices, underpinned the commodity-linked loonie and dragged the USD/CAD pair lower.

Meanwhile, the latest leg of a sudden drop took along some short-term trading stops placed near the very important 200-day SMA. A subsequent slide below the 1.2500 mark might have already set the stage for a further depreciating move. That said, elevated US Treasury bond yields should act as a tailwind for the greenback and helped limit deeper losses for the USD/CAD pair, at least for now.

Technical levels to watch