Canadian Dollar short-term outlook: USD/CAD teases the break

Canadian Dollar technical outlook: USD/CAD short-term trade levels

• Canadian Dollar trading within contractionary range, just above key support pivot
• USD/CAD remains vulnerable to larger pullback within broader uptrend
• Resistance 1.3761, 1.3828, 1.3881 (key)– support 1.3633/47, 1.3545/74, 1.3472/92 (key)

The Canadian Dollar rallied more than 1.6% against the US Dollar since the yearly highs in USD/CAD with price now testing a support at a key pivot zone. Risk for possible price inflection here with the broader outlook still constructive while above 1.3471. These are the updated targets and invalidation levels that matter on the USD/CAD short-term technical charts.

Discuss this Canadian Dollar setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.

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, “The USD/CAD rally may be maturing here near-term with the advance now testing confluent uptrend resistance.” The region in focus was around the 2022 high-close at 1.3881- price registered an intraday high at 1.3862 before reversing sharply lower with Loonie now testing support at the 38.2% Fibonacci retracement of the yearly range / March open at 1.3633/47. Looking for possible price inflection off this zone.

Canadian Dollar Price Chart – USD/CAD 240min

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

Notes: A closer look at Loonie price action shows USD/CAD breaking below the February channel support last week with the decline testing near-term support for a third time today. A break below this threshold would threaten a deeper correction towards the yearly open / 100% extension at 1.3545/73 and key support at 1.3472/92 – both regions of interest for possible downside exhaustion / price inflection IF reached.

Initial resistance remains with the yearly high-day close at 1.3761 backed by the high-close at 1.3828. Ultimately, a breach / close above 1.3881 is still needed to mark resumption of the broader uptrend.

Bottom line: USD/CAD is in a contractionary range just above a key support pivot – looking for the breakout. From a trading standpoint, rallies should be limited to 1.3761 IF price is heading lower on this stretch – ultimately, we’ll be on the lookout for an exhaustion low in the days ahead. As always, stay nimble into the close of the month / quarter. Review my latest Canadian Dollar weekly technical forecast for a look at the longer-term USD/CAD trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

• Euro short-term outlook: EUR/USD support test at prior resistance
• US Dollar short-term price outlook: six-days down into support
• Japanese Yen short-term price outlook: USD/JPY bears look to reassert
• Equities short-term outlook: S&P 500, Nasdaq, Dow breakdown levels
• Gold short-term price outlook: XAU/USD reversal gathers pace

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

Follow Michael on Twitter @MBForex