Canadian Dollar Forecast: USD/CAD Collapse Breaks July Uptrend- Risk for Further Weakness

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

USD/CAD plummets following strong Canada employment report, breaking July uptrend.
The breakdown keeps the outlook tilted to the downside, with momentum dropping to its weakest levels since August and more significant support now in view
Major event risk ahead with Bank of Canada and FOMC interest rate decisions on tap next week
Resistance 1.3899, 1.3978, 1.4010/15 (key)– Support 1.3734/69 (key), 1.3669, 1.3583

The Canadian Dollar offensive accelerated this week, with USD/CAD plunging for a second straight week as a strong Canada jobs report underscored the widening interest rate disparity. The selloff fueled a decisive break below multi-month uptrend support, shifting the broader bias lower into the weekly close. Traders will now look to see whether price can stabilize into nearby support or continues to unwind ahead of next week’s Bank of Canada and Federal Reserve rate decisions. The reaction at these levels will be pivotal as the pair enters a high-volatility stretch into year-end. Battle lines are drawn on the USD/CAD weekly technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie setup and more. Join live on Monday’s at 8:30am EST.

Canadian Dollar Price Chart – USD/CAD Weekly

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

Technical Outlook: In last month’s Canadian Dollar Technical Forecast we noted that USD/CAD was, “bound within the November range, just above support. Look for a breakout of last week’s range in the days ahead for guidance. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 1.3978 IF price is heading higher on this stretch…” The range broke lower the following week with price collapsing today on the heels of a stronger than expected Canada employment report. The decline marks the largest single-day, and single-week declines since May, with USD/CAD plunging nearly 2.2% off the November highs.

A break of the July uptrend highlights the threat for further weakness in the days ahead with more significant support now in view at 1.3734/69- a region defined by the 2025 low-week close (LWC) and the 61.8% retracement of the advance off the yearly lows. Note that the lower parallel of the June pitchfork converges on this threshold into the close of the year- look for a larger reaction there IF reached. A break / weekly close below this critical range would be needed suggest a more significant high is place and a larger trend reversal is underway. Subsequent support objectives rest with the 78.6% retracement at 1.3669 and the 2025 close-low at 1.3583.

Initial resistance is now eyed with the 2023 high at 1.3899 and is backed by the 2022 swing high at 1.3978- note that former channel support converges on this threshold over the next few weeks. Ultimately, a breach / weekly close above the 52-week moving average near this week’s high at 1.4010/15 would be needed to mark uptrend resumption (bearish invalidation). Critical resistance remains with the 50% retracement of the yearly range and the February LWC at 1.4167/84.

Bottom line: USD/CAD remains vulnerable after plunging through multi-month uptrend support with weekly momentum dropping to the lowest levels since August. From a trading standpoint, rallies should be limited to the 1.39-handle IF price is heading lower on this stretch- look to reduce short-exposure / lower protective stops on a stretch towards 1.3734.

Keep in mind we get the release of both the Bank of Canada and the Federal Reserve interest rate decisions next week. The BoC is widely expected to leave rates unchanged with the recent labor data fueling speculation that the central bank may look to hike in 2026. Fed Fund Futures are nearly fully priced for a cut next week (88%) with the next rate cut expected in March. The focus will be on the Fed’s updated Summary of Economic Projections, and the interest rate dot-plot will be critical as investors adjust the outlook for monetary policy heading into 2026. Stay nimble into the releases and watch the weekly closes 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.

US / Canada Economic Data Release

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.