Canadian Dollar Short-term Outlook: USD/CAD Surges off Support

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

USD/CAD rebounds off technical support- rally extends more than 1% post-Fed rate decision
USD/CAD recovery now testing pivotal resistance- Canada Employment, U.S. CPI on tap
Resistance 1.3881-1.39, 1.3978-1.4010 (key), 1.41- Support 1.3778/98 (key), 1.3714, 1.3614

The US Dollar is poised to mark a second consecutive daily advance with USD/CAD surging more than 1% off the yearly low on the heels of the Fed. A rebound off downtrend support is now approaching the top of a multi-month range in price and the first major test of the bulls. 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 last month’s Canadian Dollar Short-term Outlook, we noted that USD/CAD was, “in a near-term range just above downtrend support- the immediate focus is on a breakout. From a trading standpoint, rallies would need to be limited to the 200-day moving average IF price is heading lower on this stretch with a close below 1.3795 needed to mark resumption.” USD/CAD registered a low-close at 1.3778 on Tuesday before reversing sharply with the post-Fed rally now testing initial resistance at 1.3881-1.39- a region defined by the 2022 high close, the 2023 swing high, and the 100% extension of the February decline. The focus is on possible price inflection off this zone into the close of the 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 rebounding off the lower parallel with a breakout of the weekly opening-range extending into pivotal resistance. Support now rests with the low-day close (LDC) / 61.8% retracement of the December 2023 advance / monthly open at 1.3778/98- a break / close below this threshold would be needed to mark downtrend resumption towards the 78.6% retracement of the September advance at 1.3714 and the March high at 1.3614.

A topside breach above this pivot zone exposes key resistance at 1.3977-1.4010- a region defined by the 2022 high, the 2020 March weekly reversal close and the 200-day moving average. A close above this region would be needed to suggest a more significant low was registered this week / a larger reversal is underway with subsequent objectives eyed at the 1.41-handle and 1.4149/78- look for a larger reaction there IF reached.

Bottom line: A rebound off downtrend support takes USD/CAD into the topside of a multi-week range – risk of a larger recovery while above the weekly open. From a trading standpoint, losses should be limited to 1.3778 IF price is heading higher on this stretch – look for a larger reaction on test of the 200-day moving average.

Keep in mind we get the release of Canadian employment tomorrow with key U.S. inflation data on tap next week (CPI). Stay nimble into the release and watch the weekly closes here for guidance. Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD 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.