Canadian Dollar Short-term Outlook: USD/CAD Rally Stalls at Trend Resistance

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

USD/CAD USD/CAD exhausts at trend resistance at seven-month highs
Today’s pullback snaps a six-day rally — the longest winning streak since July.
Risk for a near-term correction within the July uptrend- broader outlook remains constructive
Resistance 1.4115, 1.4167/78 (key), 1.4235- Support 1.4055, 1.4011/17, 1.3978/85 (key)

The Canadian Dollar is getting reprieve today with USD/CAD snapping a six-day rally to seven-month highs. Stronger-than-expected Canadian employment figures amplified today’s decline with a reversal off uptrend resistance now threatening a deeper correction within the July uptrend. Focus now shifts to a breakout of the November opening range for guidance. Battlelines drawn on the USD/CAD 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 last month's Canadian Dollar Short-term Outlook, we noted that USD/CAD had defended support at the October range lows and, “threatens a larger recovery- the immediate focus is on the 200-day moving average. From a trading standpoint, losses would need to be limited to today’s low IF price is heading higher on this stretch with a close above 1.4045 needed to fuel the next major leg of the advance.” A six-day rally extended more than 1.8% off the October low with USD/CAD exhausting into uptrend resistance this week at the upper parallel of the July pitchfork. The immediate focus is on this pullback in the days ahead with the November opening-range taking shape above the median-line.

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 reversing sharply off uptrend resistance this week. Initial support rests with the October high close at 1.4055 and is backed by the monthly open / May high at 1.4011/17- note that the medina-line converges on this threshold next week. Ultimately a break / close below the 2022 high / 61.8% retracement of the recent advance at 1.3977/85 is needed to suggest a more significant high is in place / a larger reversal is underway. Subsequent support rests with the 200-day moving average at (currently at 1.3940) with broader bearish invalidation steady at 1.3881/99- a region defined by the 2022 high-close and the 2023 swing high.

Initial resistance now eyed with the monthly high-close at 1.4115 and is backed by the 50% retracement of the yearly range / November high at 1.4167/78. A breach / close above this threshold would threaten another accelerated advance with subsequent top-side objectives eyed at the March low at 1.4235 and the 61.8% retracement at 1.4315.

Bottom line: USD/CAD has responded to uptrend resistance and the risk now rises for a deeper pullback within the broader July advance. From a trading standpoint, losses would need to be limited to 1.3978 IF price is heading higher on this stretch with a close above 1.4178 needed to fuel the next major leg of the rally.

Note that economic data remains limited next week amid the ongoing government shutdown. Stay nimble early in the month and watch the 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.

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

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