Canadian Dollar Forecast: USD/CAD Coils into Canada Inflation

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollar consolidating within November opening-range- July rally vulnerable
• USD/CAD breakout pending – key inflation data from Canada on tap next week
• Resistance 1.3881, 1.3950/90, 1.4115 – Support 1.3640, 1.3545, ~1.3505

The Canadian Dollar rallied just 0.5% against the US Dollar this week with USD/CAD continuing to contract within the November opening-range. While the broader July rally remains intact, the focus now shifts to a breakout of this range for medium-term guidance with major event risk on tap next week. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart.

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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 was testing a major hurdle around the 1.37-handle and that, “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.” Price surged more than 1.5% higher the following week with USD/CAD briefly registering an intra-day high at 1.3899 before reversing sharply into the November open. The monthly opening-range is defined by this four-day decline with USD/CAD in consolidation over the past few weeks.

Confluent support rests with the September high-week close at 1.3640 – a break / weekly close below this threshold would threaten the broader July advance with such a scenario exposing the objective yearly open at 1.3545 and the 52-week moving average, currently ~1.3505 (look for a larger reaction there IF reached).

Weekly resistance unchanged at 1.3881 with 1.3950/90 still critical. This region is defined by the 1.618% Fibonacci extension of the 2021 advance, the 2022 swing high, and the 2020 March reversal close- a breach / close above is needed to mark resumption of the broader uptrend towards the 2016 high-week close at 1.4115.

Bottom line: USD/CAD is consolidation within the November opening-range, just above multi-month uptrend support- look to the breakout for guidance here. From a trading standpoint, we’re looking to validate a possible exhaustion high as price struggles to breach the objective 2023 range. Ultimately, a larger setback may offer more favorable opportunities with a close above 1.3990 needed to mark uptrend resumption. Keep in mind we have key Canada inflation data on tap next week- watch the closes here. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

US/ Canada Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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

Follow Michael on Twitter @MBForex