USD/CAD falls below 1.3550 as US labor market concerns intensify

USD/CAD has declined 0.4% to 1.3540, pressured by growing concerns about US labor market weakness that have strengthened Federal Reserve rate cut expectations for September. The Canadian dollar has outperformed despite mixed domestic data, benefiting from stable oil prices near $71 per barrel and broad-based US dollar selling. Markets are now pricing in a 75% probability of a 25 basis point Fed cut this month, up from 65% last week, following a series of disappointing US employment indicators. Bank of Canada is also expected to cut rates next week, but the diverging economic outlooks favor CAD strength. Technical analysis shows USD/CAD breaking below the 50-day moving average at 1.3565, opening the path toward 1.3500 psychological support. The pair faces immediate resistance at 1.3580, with a break above needed to neutralize the bearish momentum. Traders await Friday's NFP data, which could accelerate the downtrend if it confirms labor market deterioration.