Canadian Dollar Forecast: USD/CAD Breakout Looms as Trump Takes Office

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• USD/CAD Six-week rally halts into uptrend resistance- risk for price inflection ahead
• USD/CAD January opening-range breakout imminent– Trump Inauguration, Canada CPI on tap
• Resistance 1.4483, 1.4538 (key), 1.4660/90– Support ~1.43, 1.4115/63 (key), 1.3975/90

The US Dollar is poised to mark a second weekly decline against the Canadian Dollar with USD/CAD holding a well-defined monthly range just below uptrend resistance. Battle lines drawn on the USD/CAD weekly technical charts ahead of the Presidential Inauguration & Canada CPI.

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 the USD/CAD breakout was approaching initial resistance objectives and that, “losses should be limited to this week’s low IF price is heading higher on this stretch with a close above 1.4358 needed to keep the focus on a stretch towards the upper parallel / 1.4480- look for a larger reaction there IF reached.”

USD/CAD briefly registered an intraday / yearly high at 1.4467 the following day before exhausting- price has been in consolidation below this high for the past four-weeks with the 75% parallel offering support since the start of the year. The January opening-range remains intact and is defined by the first three-days of 2025 trade- we are on breakout watch with the broader long-bias vulnerable wile below the upper parallel.

Slope support currently rests near then 1.43-handle and is backed by the 2016 high-week close (HWC) / 23.6% retracement of the late 2023 rally at 1.4115/63- note that this threshold converges on the median-line over the next few weeks. Losses below this threshold would suggest a more significant high was registered last month / a larger correction is underway within the 2024 uptrend. Subsequent support seen at 1.3975/90 with broader bullish invalidation set to the 2022 HWC / 2023 swing high at 1.3881/99.

Resistance remains unchanged at the 1.618% extension of the 2023 advance at 1.4483 and is backed closely by the 2016 close high at 1.4538. A topside breach / close above the upper parallel would threaten another bout of accelerate gains for the greenback with the next major technical consideration eyed at 1.4660/90- a region defined by the 78.6% retracement of the 2021 decline, the 1.618% extension of the December 2023 advance, and the 2016 / 2020 swing highs. Look for a larger reaction there IF reached.

Bottom line: The USD/CAD January opening-range is set just below confluent uptrend resistance- look for the breakout in the days ahead for guidance. From a trading standpoint, losses should be limited to the median-line / 1.4115 for the December rally to remain viable with breach above 1.4538 needed to fuel the next major leg of the advance.

Keep in mind we are heading into an extended holiday weekend with the inauguration of President Trump and Canadian CPI on tap early in the week. A flurry of executive actions is expected- stay nimble here until we get the monthly range breakout and watch the weekly close for guidance. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex