Canadian Dollar Short-term Outlook: USD/CAD Snap Back- Bears Eye 1.35

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

• Canadian Dollar reverses off technical resistance at yearly high- off more than 0.7%
• USD/CAD approaching multi-month trend support- NFPs, Canada employment on tap
• Resistance 1.3599-1.3623 (key), 1.3685, 1.3745/49- Support 1.3515, 1.3490/1.35, 1.3447

The Canadian Dollar is on offense with USD/CAD trading lower after turning from key technical resistance at the yearly highs last week. The decline is now approaching multi-month uptrend support and the focus is on a reaction here with major event risk on tap into the close of the week. These are the updated targets and invalidation levels that matter on the USD/CAD short-term technical charts.

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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 last month’s Canadian Dollar Short-term Outlook we noted that USD/CAD was approaching support and to, “look to reduce portions of short-exposure / lower protective stops on a stretch towards 1.3442- rallies should be limited to the monthly-open IF price is heading lower.” Price briefly registered an intraday low at 1.3420 before rebounding with the advance faltering back at key resistance again into the close of March. The move keeps the medium-term focus on a breakout of this multi-week range within the yearly uptrend.

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 continuing to trade within the confines of an ascending pitchfork formation extending off the late-January. The April opening-range is being carved just below key resistance at 1.3599-1.3623- a region defined by the December high-day close (HDC), the February / March highs, and the 61.8% Fibonacci  retracement of the November decline. USD/CAD remains vulnerable while below this pivot zone.

Weekly / monthly-open support eyed at 1.3515 and is backed closely by the 100% extension of the recent decline / 61.8% retracement of the March advance / 200-day moving average near ~1.3494-1.3501. Note the lower parallel, currently ~1.3460s. Ultimately, a break / daily close below the 38.2% retracement at 1.3447 would be needed to mark a breakout of this multi-week range and shift the medium-term focus lower.

A breach / daily close above this key resistance pivot is needed to mark uptrend resumption with subsequent resistance objectives eyed at the 61.8% extension of the December rally at 1.3685 and the 78.6% retracement / 2022 HDC at 1.3745/49- both areas of interest for possible topside exhaustion / price inflection IF reached.

Bottom line: USD/CAD is carving the monthly opening-range just below resistance and immediate focus is on a possible test of uptrend support in the days ahead. From a trading standpoint, losses should be limited to 1.3447 for the January uptrend to remain viable with a close above 1.3623 needed to fuel the next leg higher. IF price breaks this upslope, the potential for a larger / deeper correction rises with subsequent support seen at 1.3387 and 1.3315/45.

Keep in mind we get the release of both US and Canada employment data on Friday- stay nimble into the April opening-range and watch the weekly close for guidance here. Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD trade levels.

Key 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 X @MBForex