Canadian Dollar Forecast: USD/CAD Rally Stalls in November Range as Breakout Risk Builds

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

USD/CAD rally exhausts into resistance at six-month highs- marks outside-week reversal off key support last week
November range compressing with a breakout to offer near-term direction
Resistance 1.4167/84 (key), 1.4292-1.4315, 1.4383– Support 1.3978/1.4019(key), 1.3881, 1.3734

USD/CAD is coiling inside the November range, with last week’s rebound staling near six-month highs. Breakout pressure is building fast, and the reaction over the next few sessions could set the tone for the next major move. The broader structure still leans constructive, but buyers must punch through resistance or risk watching the July rally unravel. Momentum is tightening, volatility is rising, and the next move is likely to be decisive. Battle lines are drawn on the USD/CAD weekly technical chart.

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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 has broken above pivotal resistance and keeps the outlook weighted to the topside into the monthly open. From a trading standpoint, losses would need to be limited to 1.3978 IF price is heading higher on this stretch.” USD/CAD exhausted into uptrend resistance early in the month before turning lower, with price briefly registering an intraweek low at 1.3971 last week. A sharp rebound off support triggered an outside-weekly reversal from the monthly low and focus now shifts to a breakout of last-week’s range for guidance on the next directional move.

Support remains unchanged at 1.3978-1.4019- a region defined by the 2022 swing high, the November open, The May high, the 52-week moving average and the 38.2% retracement of the yearly range. Note that the July channel line converges on this threshold next month and a break / close below would be needed to suggest a more significant high is in place and that a larger trend reversal is underway. Subsequent support seen at the 2022 high-week close (HWC) at 1.3881 and is backed by the 2025 low-week close (LWC) at 1.3734.

A break above last week’s range exposes the next key technical hurdle at the 50% retracement of the yearly range and the February LWC at 1.4167/84. Note that the channel resistance converges on this zone into the monthly cross and a breach / close above is needed to fuel the next major of the advance. Subsequent resistance is eyed at the 2025 HWC and the 61.8% retracement at 1.4292-1.4315 and the objective yearly open at 1.4383.

Bottom line: USD/CAD has been 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 with a close above 1.4183 ultimately needed to fuel the next major leg of this advance.

Keep in mind we get the release of the ADP employment report on Wednesday with Canada jobs data slated for Friday. Expectations for a December rate cut have now risen to 83% and with the Non-Farm Payrolls and CPI data delayed until after the FOMC policy meeting, traders will be closely eyeing these ancillary releases for guidance. Stay nimble into the monthly cross and watch the weekly closes here. 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

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