Canadian Dollar Technical Forecast: USD/CAD Battle Lines at Support

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollar snaps four-week winning streak- USD/CAD rebounds from technical support
• September monthly opening-range breakout pending- presidential debate, CPI on tap
• Resistance ~1.3600/05, ~1.3680s, 1.3753/73 (key)– Support 1.3471, 1.3342/59, 1.3218/25

USD/CAD rebounded off confluent support last week with the September opening-range now taking shape just above. The focus is on a breakout of this critical range with major event risk on tap this week. Battle lines drawn on the USD/CAD weekly technical charts.

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Canadian Dollar Price Chart – USD/CAD Weekly   

Technical Outlook: In last month’s Canadian Dollar Technical Forecast we noted that the immediate is was, “on possible price inflection into support here around the February / March highs at the 1.36-handle (also the 52-week and 200-day moving averages). A break / close below this threshold would expose subsequent support objectives at 1.3542 and the 61.8% Fibonacci retracement of the December rally at 1.3471- both areas of interest for possible downside exhaustion / price inflection IF reached.”

USD/CAD broke below the 1.36-handle that week with price plunging more than 3.6% from the August high. The decline failed to close below confluent support at 1.3471 (intraweek low registered at 1.3441) with the Dollar rebounding just over 1% from the low. The September opening-range is set just above support with key resistance eyed just higher at the 52-week moving average / 1.3605 – looking for a breakout of this range in the days ahead for guidance with the broader decline vulnerable while above last week’s low.

A topside breach / weekly close above would threaten a larger bear-market recovery with the median-line currently eyed near 1.3680s.  Key resistance / bearish invalidation now set to the 61.8% retracement of the August decline / April high-close (HC) at 1.3753/77 with a close above the 2022 high-week close (HWC) at 1.3881 ultimately needed to put the bulls in control.

A pivot / close below this support zone would be needed to validate a break of the 2021 uptrend and would threaten another bout of accelerated losses. Subsequent objectives are eyed at the 78.6% retracement if the December rally / 2024 low-week close (LWC) at 1.3342/59 and a more significant technical confluence at 1.3218/25- a region defined by the 38.2% retracement of the broader 2021 advance, the 2023 LWC and the objective yearly low. Look for a larger reaction there IF reached.

Bottom line: USD/CAD has rebounded off confluent support with the September opening-range taking shape just above- risk for price inflection off this zone early in the month. From a trading standpoint, rallies should be limited to the median-line IF price is heading lower on this stretch with a close below 1.3471 needed to mark downtrend resumption.

Keep in mind the one and only US presidential debate is slated for tomorrow night with key US inflation data on tap Wednesday. Stay nimble into the close of the week and watch the close 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