Canadian Dollar Short-term Outlook: USD/CAD Rebound Eyes First Hurdle

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

USD/CAD rebounds off downtrend support- rallies more than 1.3% off August low
Recovery vulnerable into initial resistance hurdles- risk for price inflection
Resistance 1.3613/34, 1.3667(key), 1 .37- Support 1.3573, 1.3546, 1.3472/93(key)

The US Dollar has rallied more than 1.3% against the Canadian Dollar with USD/CAD testing technical resistance on the heels of the today’s US CPI releases. The focus is on a reaction off this mark with the two-week rally vulnerable while below this pivot zone. Battle lines drawn on the USD/CAD short-term technical charts heading.

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 to be on the lookout for possible price inflection as USD/CAD was testing confluent support- “rallies should be limited to 1.37 IF price is heading lower on this stretch with a close sub-1.36 needed to keep the bears in control.” USD/CAD plunged lower the following day to mark the largest single-day decline since December.

The sell-off marked a false-break of key support around the 61.8% retracement of the December rally at 1.3472 with the August open registering just above. The recovery is now approaching initial resistance at the December high / 38.2% retracement of the August range at 1.3613/34- looking for possible price inflection into this threshold this week.

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 the confines of an ascending pitchfork formation with the upper parallel further highlighting near-term resistance here at 1.3613/34- looking for a reaction here. Weekly-open support rests at 1.3573 and is backed by the objective weekly range-low at 1.3546. The broader outlook remains constructive while within this structure with key support now seen at 1.3472/93.

A topside breach / close above this pivot-zone exposes the 1.618% extension of the late-August advance at 1.3667- look for a larger reaction there IF reached. Ultimately a close above the median-line of the broader descending structure would needed to suggest a more significant reversal is underway – subsequent resistance objectives eyed at the 1.37-handle and the 61.8% Fibonacci retracement at 1.3753.

Bottom line: A two-week recovery off support takes USD/CAD into initial resistance hurdles here- risk for topside exhaustion / price inflection in the days ahead. From at trading standpoint, losses would need to be limited to the weekly low IF price is heading higher on this stretch with a close above 1.3634 needed to fuel the next leg in price. Keep in mind the FOMC interest rate decision is on tap next week- stay nimble into the release and watch the weekly close here. Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD 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 with FOREX.com

Follow Michael on X @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.