Canadian Dollar Short-term Outlook: USD/CAD Rejected at Resistance

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

USD/CAD rally fails post CPI / jobless claims- threatens outside-day reversal off resistance
USD/CAD bears target break of June uptrend- BoC / FOMC interest rate decisions on tap next week
Resistance 1.3881/99 (key), 1.3925, 1.3978- Support 1.3828/29, 1.3789/90, 1.3729/50 (key)

USD/CAD reversed lower today after failing at technical resistance, shifting the focus back toward uptrend support. While the broader advance remains intact, bears will be looking for a deeper test of the trendline, and the losses will need to be limited for the June uptrend to stay viable. For now, the immediate focus is on a breakout of this week’s range for guidance, with resistance intact just overhead. Battle lines drawn on the USD/CAD short-term 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 plunged into, “a key pivot zone at the monthly lows. Risk for price inflection in the days ahead- watch the closes with respect to 1.3729.” Price briefly registered an intraday low at 1.3726 the following day before reversing sharply higher into the September open. A rally of more than 1.2% is exhausting into technical resistance today at 1.3881/99- a region defined by the 2022 high-close and the 2023 swing high. Looking for a larger inflection off this zone with the multi-month rally vulnerable while below.

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 reversing sharply off resistance today on the heels of a weaker than expected jobless claims report. Price is now approaching weekly-open support near the 38.2% retracement at 1.3828/29 with near-term bullish invalidation now raised to the weekly range low / 61.8% retracement at 1.3789/90. Key support remains unchanged at 1.3729/50- a region defined by the 38.2% retracement of the 2021 advance, the September open, and the Mary opening-range lows. A break / close below this threshold would be needed to shift the broader outlook back to the downside in USD/CAD.

A topside breach / close above the weekly range high would mark resumption of the June uptrend with subsequent resistance objectives eyed at August high at 1.3925 and the 2022 high at 1.3977. The next major technical consideration is now eyed at the May high / 38.2% retracement of the yearly decline / 200DMA at 1.4016/18.

Bottom line: USD/CAD failed at technical resistance today with the bears now looking for a test of uptrend support. 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.

Keep in mind the Bank of Canada and FOMC interest rate decisions are on tap next week- stay nimble into the releases 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.

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Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

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