Canadian Dollar Forecast: USD/CAD Bulls Wrestle with Resistance

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollar losses halted at key technical hurdle for a third week
• USD/CAD October opening-range remains intact- breakout to offer guidance
• Resistance 1.3697, 1.3804, 1.3881 – Support 1.3545, ~1.3481, 1.3357

The Canadian Dollar plunged more than 5.2% against the US Dollar with USD/CAD rallying into a key technical confluence early in the month. The bulls have struggled to secure a weekly close above the 1.37-handle and while the broader outlook remains constructive, the immediate focus is on a breakout of the October opening-range for near-term guidance. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart heading into the close of the month.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie setup and more. Join live on Monday’s at 8:30am EST.

Canadian Dollar Price Chart – USD/CAD Weekly

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

Technical Outlook: In my last Canadian Dollar Technical Forecast we noted that, “USD/CAD remains vulnerable near-term, but the focus is on possible downside exhaustion in the weeks ahead. From a trading standpoint, losses should be limited to 1.3322 IF price is heading higher on this stretch with a close above the 1.37-handle needed to fuel the next major move.” Loonie registered a low at 1.3417 the following day before reversing sharply higher with the rally failing to mark a weekly close above 1.37 for the past three weeks- the battle lines are drawn into the close of the month.

A topside breach / close above this resistance confluence exposes subsequent objectives into the 2023 high-close at 1.3804 and the 2022 high-week close at 1.3881. The next major zone of technical resistance is eyed at 1.3950/90- a region define by the 1.618% Fibonacci extension of the 2021 advance, the 2022 swing high, and the 2020 March reversal close. Look for a larger reaction there IF reached.

Yearly-open support rests at 1.3545 with medium-term bullish invalidation now raised to the 52-week moving average around 1.3481- a break / weekly close below this threshold would threaten a larger reversal within the yearly range towards the 61.8% retracement of the June advance at 1.3357.

Bottom line: USD/CAD is testing confluent resistance for the third consecutive week and while the medium-term outlook remains constructive, the immediate advance is vulnerable sub-1.37. From a trading standpoint, losses should be limited to the yearly open IF price is heading higher on this stretch with a close above this key zone needed to mark resumption of the July uptrend.

Keep in mind the Bank of Canada (BoC) interest rate decision is on tap next week with key US Core Inflation data slated for Friday – watch the weekly closes here. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

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

Follow Michael on Twitter @MBForex