Canadian Dollar Short-term Outlook: USD/CAD Bulls Defend Breakout

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

USD/CAD rally extends nearly 1.7% off monthly low- breakout exhausts into uptrend
USD/CAD now testing support at former resistance- ADP, NFPs on tap into monthly cross
Resistance 1.3978, ~1.3993, 1.4016/19 (key)- Support 1.3881/99, 1.3815/32 (key), 1.3774

USD/CAD is pulling back from four-month highs with the bears now challenging the monthly breakout at former resistance. This key pivot zone will be critical in determining whether the broader bullish structure holds or if the pair risks a deeper correction. 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 my last Canadian Dollar Short-term Outlook, we noted that USD/CAD had turned from resistance and that, “From at trading standpoint, losses would need to be limited to 1.3790 for the June uptrend to remain viable – for now the immediate focus is on a breakout of this week’s range for guidance.” USD/CAD plunged in the following days with price briefly registering an intraday low at 1.3727 before reversing sharply post-FOMC. An outside-day reversal off the lows has now extended nearly 1.7% with USD/CAD breaking through the September opening-range highs last week. The advance exhausted into the median-line of an ascending pitchfork extending off the monthly lows and the immediate focus is on this pullback with support now in view.

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 within an embedded channel formation off the late-September lows with the weekly opening-range taking shape just above former resistance, turned support at the 2022 high-close / 2023 high at 1.3881/99. Near-term bullish invalidation now rests with the 61.8% retracement of the monthly range / September 11 reversal close at 1.3815/32- note that pitchfork support converges on this threshold into the October open and a break below this slope would be needed to invalidate the monthly breakout. Subsequent support seen at the monthly September low-day close at 1.3774 and the 38.2% retracement of the 20212 advance / monthly open at 1.3729/44.

Initial resistance is eyed at the 2022 high at 1.3978 and is backed closely by the 200-day moving average (currently ~1.3993) and the May high / 38.2% retracement of the yearly range at 1.4016/19- both levels of interest for possible topside exhaustion / price inflection IF reached.

Bottom line: The USD/CAD rally failed at the median-line last week with the pullback now approaching support at former resistance. From a trading standpoint, losses would need to be limited to 1.3815 IF price is heading higher on this stretch with a close above the 200-day moving average needed to mark resumption of the multi-month uptrend.

Keep in mind we are heading into the close of the month / quarter with key employment data on tap into the October open. With a U.S. government shut-down looming tonight, the September Non-Farm Payroll figures may not get released on Friday and traders will be closely watching tomorrow private sector ADP report for an update on the health of the labor market. Stay nimble into the October open and watch the weekly closes 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

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

Written by Michael Boutros, Sr Technical Strategist

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