Canadian Dollar Short-term Outlook: USD/CAD Breaks Out- Bulls Eye Pivotal Resistance

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

USD/CAD breaks out of weekly opening-range after US jobs data – bulls testing confluent uptrend resistance
The immediate focus is on the reaction off this zone- outlook remains constructive while above the weekly low
Resistance 1.4104/09, 1.4141, 1.4167/78 (key)- Support ~1.4040, 1.4011, 1.3978/85 (key)

The Canadian Dollar remains under pressure after today’s US Non-Farm Payrolls release, with USD/CAD breaking higher to extend gains off the weekly lows. The advance takes price into confluent uptrend resistance, and the focus now shifts to whether the bulls can force another breakout. The response off this zone will be critical in determining near-term direction. Battle lines drawn on the USD/CAD technical charts.

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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, “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.” USD/CAD plunged more than 1.2% off the monthly high with price briefly registering an intraday low at 1.3971 on Tuesday before rebounding sharply higher. A breakout of the weekly opening-range on the heels of today’s NFP release extended nearly 1% off the lows with the advance now testing confluent resistance- looking for a reaction off this mark in the days ahead.

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 extending into resistance today at the 78.6% retracement of the monthly range and the November high-day close (HDC) at 1.4104/09. Note that the 75% parallel converges on this threshold into the close of the week and further highlights the technical significance of this level. A rally above this threshold is needed to mark uptrend resumption with subsequent resistance objectives eyed at the November swing high at 1.4141 and 1.4167/78- a region defined by the 50% retracement of the yearly range and the 2024 November swing high. Look for a larger reaction there IF reached with a breach / daily close above needed to fuel the next major leg of the advance towards the March low at 1.4235.

Initial support rest with the median-line (currently ~1.4040) and is backed by the monthly open at 1.4011 and 1.3978/85- a region defined by the 2022 swing high and the 61.8% retracement of the late-October advance. Losses below this threshold would suggest a more significant high is in place and a larger trend reversal is underway towards the 200-day moving average, currently near ~1.3928.

Bottom line: A breakout of the weekly opening range is testing uptrend resistance today- risk for possible price inflection off this mark. From a trading standpoint, losses should be limited to the median-line IF price is heading higher on this stretch with a close above 1.4109 needed to fuel the next leg of the advance. Watch the weekly close 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

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Active Short-term Technical Charts

Written by Michael Boutros, Senior Technical Strategist

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