Canadian Dollar Forecast: USD/CAD Plunges Towards Uptrend Support

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• USD/CAD reverses off technical resistance at fresh yearly highs marking second weekly-decline
• Canadian Dollar bulls eye multi-month trend support- major event risk on tap into monthly cross
• Resistance ~1.38, 1.3849/81, 1.3990– Support 1.3623/53, 1.3499-1.3511, 1.3432

A Canadian Dollar counter-offensive is underway with USD/CAD off nearly 1.4% from the yearly highs registered last week. A reversal off technical uptrend resistance is now searching support with an outside-reversal candle today poised to snap a five-day losing streak. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart ahead of major event risk into the monthly cross.

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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 USD/CAD was approaching a major resistance hurdle and that, “From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 1.3623/53 IF reached- losses should be limited to 1.3447 IF price is heading higher on this stretch with a close above this hurdle needed to fuel the next major leg in price.” Resistance held for more than two-weeks with price registering an intraweek low at 1.3478 before finally breaking higher on April 10^th. USD/CAD surged nearly 3.2% off the March low

An advance of nearly 3.2% off the March low faltered into confluent resistance at fresh yearly highs last week at 1.3849/81- a region defined by the 100% extension of the December rally and objective 2022 high-week close (HWC). Note that a pair of trendlines (red) also converges on this threshold over the next few weeks and further highlights the technical significance of this key pivot zone. Although the December rally does remain vulnerable while below this level, the broader outlook stays constructive while within this multi-month uptrend.

Initial weekly support now rests at former resistance (1.3623/53) – looking for a reaction into this zone over the next few weeks (note that price is already poised to mark an outside-day reversal off this zone today). A break / weekly close below would suggest a more significant high was registered last week and threaten a larger scale correction towards the 52-week moving average / 50% retracement at 1.3499-1.3511 and the 61.8% Fibonacci retracement of yearly range at 1.3432 – both regions of interest for possible downside exhaustion / price inflection IF reached.

Look for initial resistance into the 1.38-handle backed again by 1.3849/81- a breach / weekly close above this threshold is needed to validate a potential multi-year consolidation breakout with such a scenario exposing the March 2020 reversal close at 1.3990 and 1.618% extension / 2016 HWC at 1.4114.

Bottom line: A reversal off confluent resistance is now searching support within the yearly uptrend. From a trading standpoint, losses should be limited to 1.3623 IF price is heading higher on this stretch with a close above 1.3881 needed to fuel the next major leg of the advance. Ultimately, a break below the December uptrend would threaten a larger correction with broader bullish invalidation steady at 1.3432.

Keep in mind we get the release of key economic data into the monthly crossover with US GDP, PCE, the FOMC interest rate decision and Non-Farm Payrolls on tap over the next week. Stay nimble into the May open and watch the weekly closes here for guidance. I’ll publish an updated Canadian Dollar Short-term Outlook once we get further clarity on 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 X @MBForex