Canadian Dollar Forecast: USD/CAD Flirts with 50-Day SMA

Market chart
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By :  ,  Strategist

Canadian Dollar Outlook: USD/CAD

USD/CAD may attempt to retrace the decline from the monthly high (1.3947) should it fail to close below the 50-Day SMA (1.3722).

Canadian Dollar Forecast: USD/CAD Flirts with 50-Day SMA

USD/CAD seems to be unfazed by the unexpected decline in Canada Employment as it’s little changed from the open, but signs of a weakening labor market may push the Bank of Canada (BoC) to further support the economy as job growth contracts 2.8K in July after falling 1.4K the month prior.

As a result, the Canadian Dollar may face headwinds ahead of the next BoC meeting on September 4, and it remains to be seen if Governor Tiff Macklem and Co. will implement lower interest rates following the back-to-back rate cuts.

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USD/CAD Price Chart –Daily

USDCAD Daily Chart 08092024

Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView

  • Keep in mind, the recent selloff in USD/CAD materialized as it failed to test the 2022 high (1.3978), with a break/close below 1.3700 (23.6% Fibonacci retracement) raising the scope for a move towards 1.3630 (38.2% Fibonacci retracement).
  • Next area of interest comes in around the July low (1.3589) but USD/CAD may attempt to retrace the decline from earlier this month if it struggles to close below the 50-Day SMA (1.3722).
  • A move back above the 1.3810 (161.8% Fibonacci extension) to 1.3830 (38.2% Fibonacci extension) region may push USD/CAD back towards 1.3900 (50% Fibonacci extension), with a breach above the monthly high (1.3947) bringing the 2022 high (1.3978) back on the radar.

Additional Market Outlooks

US Dollar Forecast: USD/JPY Continues to Defend January Low

Gold Price to Eye Monthly High on Failure to Close Below 50-Day SMA

US Dollar Forecast: EUR/USD Stalls Ahead of January High

British Pound Forecast: GBP/USD Susceptible to Test of July Low

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

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