Canadian Dollar Technical Forecast: USD/CAD Spills into Support

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollar reversal from yearly lows vs US Dollar poised for third weekly rally after
• USD/CAD testing first major support hurdle at yearly moving average
• Resistance ~1.37, 1.3773, 1.3849/81 (key)– Support 1.3605, 1.3542, 1.3471

The Canadian Dollar is rallying for a third consecutive week with USD/CAD now off nearly 2.5% from the yearly high. The decline takes price into support at multi-week lows and the focus is on possible price inflection here over the next few days. Battle lines drawn on the USD/CAD weekly technical charts.

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Canadian Dollar Price Chart – USD/CAD Weekly   

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

Technical Outlook: In my last Canadian Dollar Technical Forecast we noted that USD/CAD had, “rallied into technical resistance at fresh yearly highs – risk for possible exhaustion / price inflection off this mark. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses would need to be limited to 1.3773 IF price is heading higher on this stretch…” USD/CAD marked a massive outside-weekly reversal (more than 1.5%) the following week with price now poised to mark a third consecutive weekly decline.

The immediate focus is on possible price inflection into support here around 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.

Look for initial resistance along the median-line (currently ~1.37) backed by the April high-close at 1.3773- rallies should be limited to this threshold IF price is heading lower on this stretch. Key weekly resistance remains unchanged at 1.3849/81 - a region defined by the 100% extension of the December rally and objective 2022 high-week close (HWC).

Bottom line: A reversal off key resistance now takes USD/CAD into the first major support hurdle. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to 1.3773 If rice is heading lower on this stretch with a close below 1.36 needed to fuel the next leg lower. Keep in mind that Fed Chair Powell is set to speak at the Jackson Hole Economic Symposium – stay nimble into the close of the week and watch the close here for guidance. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

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

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