Canada jobs miss hits loonie; USDCAD rally stalls at resistance

In September, Canada's jobs report came in below forecasts, with employment dropping by 68,300 while a gain of 9,200 had been anticipated. That follows a decrease of 41,700 in August, meaning total job losses over the two months reached 110,000.

The labour market weakness was present in both full-time and part-time categories:

• Full-time employment declined by 35,400.

• Part-time employment declined by 32,900.

• The unemployment rate rose to 6.5%, in line with expectations.

• The participation rate fell to 64.8%.

The drop in the participation rate is notable. As fewer people are in the labour force, the unemployment rate can stay lower even when employment falls.

The USDCAD initially surged but buyers are finding it hard to maintain the breakout.

As the Canadian dollar weakened, the USDCAD initially spiked higher. The price broke above this week's prior high of 1.42928, a level that also corresponds to the 61.8% Fibonacci retracement from the February 2025 peak to the late-January 2026 trough.

The session high was 1.4298, but the pair has retreated back under that resistance and is now around 1.4280.

Buyers had an opportunity to push upward, but have not managed to hold the gain. This is a warning sign, especially given the weak jobs data provided a fundamental catalyst.

Which levels are now important?

A trendline that links this week's highs sits around 1.4269. That serves as a nearby risk level for buyers eyeing another attempt higher.

If the price remains above 1.4269, the decline can be considered a correction within the uptrend. Then buyers need to retake 1.42928 and hold above it to allow further gains.

If it drops below 1.4269, the failed breakout could trigger more selling, targeting:

• 100-hour moving average: 1.42415.

• 200-hour moving average: 1.4232.

These moving averages serve as the next key support. A move under both would tilt the technical outlook more decisively toward the bears.

The key question is whether the pullback is temporary or the start of a larger reversal.

Price action will provide the answer. The trendline at 1.4269 is the immediate gauge. Resistance at 1.42928 remains the barrier buyers must overcome and hold.