USD/CAD drops toward 1.3400, hits 2-week lows

The Canadian dollar is the top performer boosted after labor market data from Canada that surpass expectations. USD/CAD extended the slide after the beginning of the American session. It reached a fresh low at 1.3423, the weakest in two weeks. 

Currently, it trades at 1.3435, almost a hundred pips below the level it had three hours ago, before the Canadian employment report. According to the data, employment rose in May by 54.5K above the 11.5K expected. All those jobs were full-time positions. The unemployment rate rose from 6.5% to 6.6% due to an increase in the labor force participation. 

Levels to watch 

The pair is now testing a key support around 1.3420/30, that capped the downside during the last two weeks. A consolation below could add momentum to the loonie and would expose May lows that lie at 1.33. 

The greenback needs to hold on top of 1.3420/30 in order to avoid another sell-off. To the upside, the next resistance is seen at 1.3500 and then the key level around 1.3540 that capped the upside during the week. As long as USD/CAD remains under 1.3550, the upside is seen limited.