Canadian Dollar Short-term Outlook: USD/CAD Bulls Battle Resistance

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

• Canadian Dollar trading at yearly lows vs US Dollar- USD/CAD breakout testing resistance
• USD/CAD rally may be vulnerable into November open- Fed, NFP & Canada Employment on tap
• Resistance 1.3881, 1.3930s, 1.3978/90– Support 1.3761/85, 1.3685, 1.3545/77

The Canadian Dollar remains on the defensive into the close of the month with the USD/CAD breakout testing fresh yearly highs this week. While the broader outlook remains constructive, the immediate advance may be vulnerable here with major event risk on tap into the November open. These are the updated targets and invalidation levels that matter on the USD/CAD short-term technical charts into the close of the week.

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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 my last Canadian Dollar Short-term Outlook we noted that USD/CAD was testing confluent resistance into, “the yearly high-day close and while the broader outlook remains constructive, the immediate advance may be vulnerable here near-term. From at trading standpoint, be on the lookout for an exhaustion low ahead of 1.3545 in the days ahead with a breach / close above 1.3774 needed to fuel the next leg higher in price.” USD/CAD plunged more than 1.5% in the following days with price registering in intraday low at 1.3569 before reversing sharply higher. The breakout exhausted into resistance last week at the 2022 high-close (1.3881) and the focus is on possible inflection off this mark into the November open.

Canadian Dollar Price Chart – USD/CAD 240min

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

Notes: A closer look at Canadian Dollar price action shows USD/CAD breaching technical resistance last week at the March high-day close / October opening-range highs at 1.3761/85- look for initial support there now. A topside breach from here keeps the focus on the upper parallel (currently ~1.3930s) and the next major technical confluence at 1.3978/90- a region defined by the 2022 swing high and the March 2020 weekly-reversal close. Look for a larger reaction there IF reached.

A break below this support pivot would threaten a deeper correction within the July uptrend with medium-term bullish invalidation now raised to the September high-day close at 1.3685.

Bottom line: USD/CAD is testing fresh yearly highs into the close of the month with the Fed interest rate decision, US Non-Farm Payrolls (NFPs) and Canada employment on tap into the November open- expect some volatility here. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- pullbacks should be limited to 1.3685 IF price is heading higher on this stretch with a close above 1.3881 needed to mark uptrend resumption. Review my latest Canadian Dollar Weekly Technical Forecast for a look at the longer-term USD/CAD trade levels.

USD/CAD 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