Canadian Dollar short-term outlook: USD/CAD breakout levels

Canadian Dollar technical outlook: USD/CAD short-term trade levels

• Canadian Dollar breakout of yearly opening-range threatens further Loonie losses
• USD/CAD five-day rally testing short-term uptrend resistance
• Resistance 1.3816, 1.3881 (key), 1.3977– support 1.3749, 1.3646/69 (key), 1.3545

The Canadian Dollar is attempting to snap a five-day losing streak with a breakout in USD/CAD now testing uptrend resistance. We’re looking for possible price inflection here with the broader outlook still constructive while above the monthly open. These are the updated targets and invalidation levels that matter on the USD/CAD short-term technical charts.

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Canadian Dollar Price Chart – USD/CAD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In last month’s Canadian Dollar short-term outlook we noted that, “defended uptrend support twice this month and the immediate focus is on a breakout of the February opening-range for guidance.” A topside breach of the monthly opening-range fueled a rally of nearly 4.2% off the February lows with the advance now testing resistance at the 78.6% Fibonacci retracement here at 1.3816- looking for a reaction up here.

Canadian Dollar Price Chart – USD/CAD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an ascending channel formation with the upper parallel further highlighting resistance near 1.3816. A topside breach / close above the 2022 high-close (high-week close) at 1.3881 would be needed to fuel the next leg higher in price towards the 2022 high at 1.3977 and 1.4085.

Initial support rests with the 2022 high-day close at 1.3749 with near-term bullish invalidation at 1.3646/69- a region defined by the objective March open and the January high-day close. Weakness below this threshold would threaten a test of the yearly open at 1.3545.

Bottom line: The USD/CAD rally may be maturing here near-term with the advance now testing confluent uptrend resistance. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- losses should be limited to 1.3646 IF price is heading higher on this stretch with a breach / close above 1.3881 needed to mark resumption. Review my latest Canadian Dollar weekly technical forecast for a look at the longer-term USD/CAD trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com