During Monday's European trading session, the USD/CAD pair continued a modest upward trend, with the exchange rate consolidating near 1.3660. Markets are assessing the potential impact of Canada's January employment data and the upcoming US employment report on monetary policy.

From the Canadian perspective, Statistics Canada data revealed an unexpected decline of 24,800 jobs in January, although the losses were entirely in part-time positions. Concurrently, the Canadian unemployment rate fell to 6.5%, the lowest level since September 2024, beating expectations of 6.8%.

This data indicates that Canada's labor market remains resilient, reducing market expectations for significant interest rate cuts from the Bank of Canada. This provides support for the Canadian dollar and, to some extent, limits the upside potential for USD/CAD.

On the US side, Federal Reserve Vice Chair Philip Jefferson stated last week that current interest rates are roughly in a neutral range, the labor market is stable, and policy is well-positioned to handle potential risks. He emphasized that future actions will be data-dependent.

San Francisco Fed President Mary Daly suggested that one or two rate cuts might be necessary to address potential labor market weakness. Markets will continue to monitor speeches from Fed officials, including Christopher Waller, Stephen Milan, and Raphael Bostic. Dovish commentary could exert pressure on the US dollar in the short term.

The delayed release of the US January employment report on Wednesday will be a key focus. It is expected to show an addition of 70,000 jobs, with the unemployment rate holding steady at 4.4%. The report's outcome will provide crucial insights into the Fed's future policy path, significantly influencing the US dollar's direction and the USD/CAD exchange rate.

From a daily chart perspective, USD/CAD has been oscillating within the 1.3650-1.3680 range after retreating from recent highs, indicating a balance between bullish and bearish forces. The pair is currently hovering near key moving averages, with bulls lacking clear short-term momentum.

Immediate support is found at 1.3640. A break below this level could see the pair test the next support near 1.3620, which aligns with previous consolidation lows and might attract short-term buying interest. Initial resistance sits at 1.3680. A break above this level would likely target the psychological barrier at 1.3700, with further resistance anticipated around the 1.3730 area.

Technical indicators show the MACD hovering near the zero line, suggesting weak short-term momentum. The RSI is around 48, slightly below the neutral 50 level, indicating balanced momentum. This suggests the pair may continue its range-bound movement between support and resistance levels. A decisive close outside these key levels would provide a signal for the next directional trend.

In the short term, USD/CAD exhibits a slightly weak, consolidative pattern. The Canadian dollar is supported by domestic employment data, while the US dollar faces pressure from market expectations of future Fed rate cuts. Attention remains on the US Non-Farm Payrolls data and commentary from Fed officials for their impact on the US dollar, alongside monitoring whether the exchange rate stabilizes within the 1.3640-1.3680 range.