Canadian Dollar Short-term Outlook: USD/CAD Grinds at Support
USD/CAD is poised to mark a second weekly decline with the bears testing key support near the yearly lows post-NFP. Battlelines drawn on the short-term technical charts.
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Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels
- USD/CAD reversal off resistance takes two-week plunge back into support near yearly lows
- USD/CAD July opening-range in focus – Canada employment on tap
- Resistance 1.3714/29 (key), 1.3795/98, 1.3881/99 - Support 1.3571/90 (key), 1.3504/23, 1.3420
The U.S. Dollar is poised to mark a second weekly decline vs the Canadian Dollar with USD/CAD down more than 1.6% off the June high. The decline takes price into support at the yearly low-close and the focus is on possible price infection into this threshold 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 last month’s Canadian Dollar Short-term Outlook, we noted that USD/CAD was, “testing downtrend resistance at the median-line and the first major hurdle- looking for possible price inflection off lateral resistance just higher. From at trading standpoint, losses should be limited to the low-day close IF price is heading higher on this stretch…” The rally extended more than 1.9% off the lows in the following days but was unable to mark a daily close of the June open. The subsequent reversal takes USD/CAD back into support today at the yearly low-day close and the focus is on a reaction off this mark into the July opening-range.
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 just above key support into the start of the month at 1.3571/90- a region define by the yearly low-day close (LDC), and the May, June & July swing lows. A break / close below this threshold would threaten downtrend resumption towards key lateral objectives at the 1.618% extension of the yearly decline / 78.6% retracement of the late-2023 advance at 1.3504/23. Subsequent support seen at the March low at 1.3420, the July 2023 high at 1.3387, and the 2024 February low-day close LDC at 1.3315.
Resistance remains unchanged at 1.3714/29- a region defined by the 78.6% retracement of the September rally and the 38.2% retracement of the broader 2021 advance. Key resistance now stands at the May open / June high / 61.8% retracement at 1.3795/98 with a breach / close above the upper parallel ultimately needed to suggest a more significant low is in place / a lager reversal is underway (bearish invalidation).
Bottom line: The USD/CAD is carving 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.
Keep in mind we are in the early throws of the July opening-range with U.S. markets closed tomorrow for Independence Day. Stay nimble here and watch the weekly closes 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.
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Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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