Canadian Dollar Short-term Outlook: USD/CAD Coils Below Key Resistance
Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels
- USD/CAD rally extends nearly 1.3% off monthly low- recovery testing February downtrend
- USD/CAD weekly opening-range break to offer guidance – U.S PPI, retail sales on tap
- Resistance 1.3729/50 (key), 1.3795/98, 1.3881/99 - Support 1.3670, 1.3571/90 (key), 1.3504/23
The U.S. Dollar is attempting to mark a third consecutive daily advance against the Canadian Dollar with the USD/CAD recovery now threatening the yearly downtrend. The weekly opening-range is set just below resistance and the breakout may offer further guidance in the days ahead. Battle lines drawn on the USD/CAD short-term technical charts.
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 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 USD/CAD had set the, “monthly opening-range just above support at the 2025 close low- looking for a reaction off this mark. From at trading standpoint, rallies would need to be limited to 1.3729 IF price is heading lower on this stretch with a close below 1.3571 needed to fuel the next leg lower in USD/CAD.” Price rallied nearly 1.3% off the monthly low with the advance now testing resistance at 1.3729/50- a region defined by the 38.2% retracement of the 2021 rally and the May opening-range lows. Note that pitchfork resistance converges on this threshold over the next few days and further highlights the technical significance of this key zone- looking for a reaction off this mark this week.
Canadian Dollar Price Chart – USD/CAD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Notes: A closer look at Canadian Dollar price action shows USD/CAD trading within the confines of an embedded channel extending off the monthly low with the weekly opening range taking shape just below confluent resistance at 1.3729/50. Ultimately, a breach / close above the June high / 61.8% retracement of the December 2023 advance at 1.3795/98 is needed to suggest a more significant low was registered last month / a larger trend reversal is underway. Subsequent resistance seen at the 2022 high close / 2023 high at 1.3881/99 and the 2022 high / 2020 March weekly-reversal close at 1.3977/90- both levels of interest for possible topside exhaustion / price inflection IF reached.
Initial support rests with the weekly range lows at 1.3670- a break / close below the monthly channel would threaten resumption of the broader downtrend. Subsequent support objectives unchanged at the yearly low-day close (LDC) / May, June, July lows at 1.3571/90 and the Fibonacci confluence at 1.3504/23.
Bottom line: The USD/CAD is testing confluent resistance at the February downtrend with the weekly opening-range set just below- look for the breakout in the days ahead. From a trading standpoint, losses would need to be limited to the weekly lows IF price is heading for a breakout on this stretch with a close above 1.3795 ultimately needed to put the bulls in control.
Keep in mind we get the release of U.S. produce prices tomorrow with June retail sales on tap Thursday. Stay nimble into the releases and watch the weekly close for guidance. Review my latest Canadian Dollar Weekly Forecast for a closer look at the longer-term USD/CAD technical trade levels.
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Written by Michael Boutros, Sr Technical Strategist
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