Canadian Dollar Forecast: USD/CAD Advances Toward Yearly Open – Breakout Risk Builds

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• USD/CAD has rebounded off multi-year slope support and is now pressing toward a key pivot near the yearly open.
• Price continues to trade within the broader downtrend structure, leaving the advance conditional on a sustained break above resistance.
• Key US inflation & GDP data on tap into the close of the week
• Resistance 1.3725/33 (key), 1.38, 1.3889-1.3929 – Support 1.3617, 1.3494 (key), 1.3431

USD/CAD is pushing higher after finding footing along long-term slope support, carrying price back toward the yearly open — a level that has repeatedly served as a structural pivot. The recovery has been orderly, but it remains confined within the broader downtrend framework. With resistance now directly overhead, the pair approaches a decisive test. A sustained move beyond this threshold would shift the technical outlook toward a broader recovery, while rejection could reinforce the prevailing bearish bias and reopen downside targets. Battle lines drawn on the USD/CAD weekly technical chart.

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 Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In last month’s Canadian Dollar Technical Forecast we noted that USD/CAD was approaching the 2025 swing lows and that, “. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to 1.3669 IF price is heading lower on this stretch with a close below 1.3540 needed to fuel the next leg of the decline.” The selloff extended in the following days with USD/CAD registering an intraday low at 1.3482 before rebounding into the close of January.          

A rebound of more than 1.8% off the yearly low failed at resistance early in the month at 1.3725/33- a region defined by the objective yearly open, the 38.2% retracement of the November decline, and the 2023 swing high. The monthly range is set just below this key pivot zone, and the focus is on a breakout in the weeks ahead. Note that the 75% parallel converges on this threshold into the close of the month and a break / weekly close above this slope is needed to suggest a more significant recovery is underway in USD/CAD. Subsequent resistance is eyed at the 1.38-handle with the next major technical consideration on eyed at the 61.8% retracement and the 2023 / 2026 highs at 1.3889-1.3929.

Initial weekly support rests with the January low-week close at 1.3617. Ultimately, a break / weekly close below the 2023 trendline would be needed to mark resumption of the broader 2025 downtrend towards the 2024 August low close at 1.3494 and the 100% extension of the November decline at 1.3431. Both levels of interest for possible downside exhaustion / price inflection IF reached. The next major technical consideration is eyed with the 2024 low-week close (LWC) and the 61.8% extension of the 2025 decline at 1.3360/66.

 

Bottom line: USD/CAD has rebounded off multi-year slope support with pivotal resistance now in view near the yearly open. From a trading standpoint, losses should be limited to 1.3617 IF price is heading higher on this stretch with a close above 1.3733 needed to suggest fuel the next leg of the advance.

Keep in mind we get the release of key US data releases this week with the Core Consumer Price Index (PCE) and the preliminary Q4 GDP on tap Friday. The GDP figures are expected to show the US economy grew at an annualized pace of just 3% after a previous print of 4.4%. It is important to note that this data covers the longest US government shut down in history (43days). As such, a stronger than expected print would underscore underlying strength / resilience in the US market and could further fuel the Dollar advance. Stay nimble into the release and watch the weekly close for guidance here. I’ll publish an updated Canadian Dollar Short-term Outlook later this week with a closer look at the near-term USD/CAD technical trade levels.

US/ Canada Economic Data Release

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

• British Pound (GBP/USD)
• US Dollar Index (DXY)
• S&P 500, Nasdaq, Dow
• Japanese Yen (USD/JPY)
• Crude Oil (WTI)
• Euro (EUR/USD)
• Gold (XAU/USD)
• Bitcoin (BTC/USD)
• Australian Dollar (AUD/USD)
• Swiss Franc (USD/CHF)

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex