Canadian Dollar Forecast: USD/CAD Coils Below Yearly Downtrend
USD/CAD is testing the 2025 downtrend with the September opening-range taking shape just below- breakout imminent. Battle lines drawn on the weekly technical chart.
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Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- USD/CAD rebounds off key support into September open- five-day rally stalls at resistance
- USD/CAD monthly opening-range breakout to offer guidance- Core PPI / CPI data on tap
- Resistance 1.3835 (key), 1.3915, 1.3977-1.4018– Support 1.3733 (key), 1.3687, 1.3583
USD/CAD has rallied into the yearly downtrend, with price now testing a major technical barrier as the September range takes shape just below. This level represents a key inflection point for the June rally and the bulls may be vulnerable near-term while below this slope. Battle lines drawn on the USD/CAD weekly technical chart.
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 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 was, “struggling at a major technical hurdle here and a close above this key pivot zone is needed to validate the breakout of the yearly downtrend. From a trading standpoint, losses would need to be limited to 1.3733 IF price is heading higher on this stretch with a weekly close above 1.3835 needed to fuel the next leg of the June advance.” USD/CAD plunged more than 1.4% off the monthly highs in the following days before rebounding off support this week at the 2025 low-week close (LWC) at 1.3733 (intraday low registered at 1.3727).
USD/CAD has now rallied more than 0.6% with a five-day advance exhausting into confluent resistance again on Friday at the 61.8% retracement of the May decline / 23.6% retracement of the yearly range 1.3835. Note that a sliding parallel of the yearly downtrend (red) converges on this threshold and further highlights the technical significance of this zone over the next few weeks.
A topside breach / close above this threshold exposes the 78.6% retracement at 1.3915 and key resistance at 1.3977-1.4019- a region defined by the 52-week moving average, the 2022 swing high, and the 38.2% retracement. Look for a larger reaction there IF reached with a topside breach / close above needed to suggest the yearly low is in / a larger trend reversal is underway.
A break / close below this range would shift the focus towards key support at the 61.8% retracement of the June advance at 1.3687- we’ll reserve this threshold as our bullish invalidation level and a break below would threaten resumption of the broader yearly downtrend. Subsequent support objectives eyed at the yearly close low at 1.3583 and 1.3504/23- a region define by the 1.618% extension of the February decline and the 78.6% retracement of the late-2023 advance (look for a larger reaction here IF reached).
Bottom line: USD/CAD is carving the September opening-range just below confluent resistance – look for a breakout 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 the yearly low-week close IF price is heading higher on this stretch with a close above 1.3835 needed to validate a breakout of the yearly downtrend.
Keep in mind we get the release of key U.S. inflation figures next week with the Core PPI & CPI data on tap Wednesday & Thursday respectively. Stay nimble into the releases and watch the weekly close here for guidance. 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
Follow Michael on X @MBForex
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