Canadian Dollar Short-term Outlook: USD/CAD Plunges to Key Support

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

USD/CAD marks outside-day reversal off resistance- plunges more than 1.3% off monthly high
USD/CAD risk for inflection into key pivot zone- Core PCE, NFPs, Canada employment on tap
Resistance 1.3815, 1.3856, 1.3881/99 (key)- Support 1.3729/50 (key), 1.3687/90, 1.3571/90

USD/CAD is poised to mark a third consecutive daily loss with a break of the July uptrend driving price into a key pivot zone at the monthly lows. This area now represents a critical threshold for the near-term outlook as the bulls look to secure a larger breakdown. 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 rebounded off technical support and that, “losses should be limited to 1.3729 IF price is heading higher on this stretch with a close above 1.39 still needed to mark resumption of the July uptrend.” USD/CAD held support that week with price rallying more than 1.3% to fresh multi-month highs. A brief stint above the 1.39-handle failed last week on the heels of Fed Chair Powell’s comments at Jackson Hole with an outside-day reversal on Friday extending more than 1.3% off the high.

The decline marks a break of the July uptrend and takes USD/CAD into a key pivot zone here at 1.3729/50- a region defined by the 38.2% retracement of the 2021 advance, the August close low, and the May opening-range lows (ORL). Threat for possible price inflection off this zone into the monthly cross with the bears vulnerable while above.

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 breaking below the objective weekly opening-range yesterday with the decline trading within a near-term channel off the highs. Initial resistance is eyed back at 1.3815 and is backed closely by the objective August open at 1.3855. Critical resistance remains unchanged at the 2022 high-close / 2023 high at 1.3881/99 and a breach / close above would be needed to shift the medium-term outlook back to the topside in USD/CAD.

A break below this pivot zone exposes a key Fibonacci confluence at 1.3687/90- look for a larger reaction there IF reached with a break / close below needed to fuel the next major leg of the decline. Subsequent support seen at the yearly low-day close (LDC) / May, June & July lows at 1.3571/90 and the yearly low at 1.3540.

Bottom line: USD/CAD has broken the July uptrend with the decline now testing a key pivot zone at the monthly lows. Risk for price inflection in the days ahead- watch the closes with respect to 1.3729. From a trading standpoint, rallies should be limited to 1.3855 IF price is heading lower on this stretch with a close below 1.3687 ultimately needed to fuel the next major leg of the decline.

Keep in mind we get the release of Core Personal Consumption Expenditures tomorrow into the extended holiday break with Non-Farm Payrolls and Canada employment on tap next week. Stay nimble into the monthly cross and watch eh weekly closes here for guidance. Review my latest Canadian Dollar Weekly Forecast for a closer look at the longer-term USD/CAD technical trade levels.

Key USD/CAD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

Written by Michael Boutros, Sr 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.