Canadian Dollar Outlook: USD/CAD
USD/CAD tumbles to a fresh weekly low (1.3626) after struggling to push above the 50-Day SMA (1.3790), and the exchange rate may give back the rebound from the monthly low (1.3540) should it continue to track the negative slope in the moving average.
Canadian Dollar Forecast: USD/CAD Tumbles Toward June Low
USD/CAD snaps the range bound price action from earlier this week as the final revision to the US Gross Domestic Product (GDP) report shows the economy contracting 0.5% in the first quarter of 2025 versus an initial forecast for a 0.2% decline, and the exchange rate may face increased volatility as the update to the Personal Consumption Expenditure (PCE) Price Index is anticipated to show sticky inflation.
US Economic Calendar
The core PCE, the Federal Reserve’s preferred gauge for inflation, is anticipated to increase to 2.6% in May from 2.5% per annum the month prior, and the data print may encourage the central bank to retain the current policy as Chairman Jerome Powell tells US lawmakers that ‘increases in tariffs this year are likely to push up prices and weigh on economic activity.’
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As a result, waning expectations for an imminent Fed rate-cut may generate a bullish reaction in the US Dollar, but a softer-than-expected PCE print may keep USD/CAD under pressure as it puts pressure on the Federal Open Market Committee (FOMC) to further unwind its restrictive policy.
With that said, USD/CAD may continue to track the negative slope in the 50-Day SMA (1.3790) as it still holds below the moving average, and failure to defend the rebound from the June low (1.3540) may trigger an oversold reading in the Relative Strength Index (RSI) like the price action from earlier this month.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD continues to fall from a fresh monthly high (1.3798) after failing to close above 1.3780 (23.6% Fibonacci extension), and a close below 1.3630 (38.2% Fibonacci extension) may lead to a test of the monthly low (1.3540).
- A break/close below the 1.3510 (50% Fibonacci extension) to 1.3520 (23.6% Fibonacci extension) region opens up the October low (1.3473), but USD/CAD may face range bound conditions should it defend the rebound from the monthly low (1.3540).
- Lack of momentum to close below 1.3630 (38.2% Fibonacci extension) may push USD/CAD back towards the 1.3700 (38.2% Fibonacci extension) to 1.3710 (78.6% Fibonacci retracement) zone, with a move above 1.3780 (23.6% Fibonacci extension) bringing the monthly high (1.3798) on the radar.
Additional Market Outlooks
USD/CHF Selloff Stalls to Keep RSI Out of Oversold Zone
AUD/USD Recovery Materializes amid Failed Attempt to Test May Low
US Dollar Forecast: USD/JPY Reverses Ahead of May High
EUR/USD Faces Fed Chair Powell Testimony
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
