Canadian Dollar Forecast: USD/CAD Nine-Day Rally Slams into Pivotal Resistance

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• USD/CAD surges more than 1.9% off December low- price poised to mark ninth-consecutive daily advance
• Limited reaction to mixed jobs data from US & Canada – technicals keep focus on pivotal resistance
• Key US inflation data next week will be critical for USD as Fed rate cut odds get pushed back
• Resistance 1.3899, 1.3950/78 (key), 1.4047– Support 1.3734/69, 1.3669 (key), 1.3583

USD/CAD has surged for nine consecutive sessions, lifting the pair more than 1.9% off the December lows and carrying price into a pivotal resistance zone today on the heels of US & Canada jobs data. The advance now confronts a key technical pivot zone near the 2023 yearly high, and while the broader structure remains constructive, the immediate focus is on possible inflection at this threshold in the days ahead. A reaction here is likely to determine whether the rally can extend or pauses before the next leg higher. Battle lines drawn on the USD/CAD weekly technical chart.

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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, “vulnerable after plunging through multi-month uptrend support with weekly momentum dropping to the lowest levels since August. From a trading standpoint, rallies should be limited to the 1.39-handle IF price is heading lower on this stretch- look to reduce short-exposure / lower protective stops on a stretch towards 1.3734.” USD/CAD plunged another 1.2% in the following days with price registering an intraday low at 1.3642 into the close of the month before rebounding.

The rally is now poised to mark a ninth-consecutive daily advance with USD/CAD up more than 1.9% off the December lows. The recent surge takes price into a key pivot-zone this week at the 2023 yearly high at 1.3899 with weekly momentum (RSI) attempting to break back above 50 for the first time since November. Note that the median-line converges on this threshold over the next few weeks and the immediate focus is on possible inflection off this slope in the days ahead.

Initial weekly support rests with the 2023 low-week close (LWC) and the 61.8% retracement of the June rally at 1.3734/69 with broader bullish invalidation set tot the 78.6% retracement at 1.3669. Note that the lower parallel of the June pitchfork converges on this threshold over the next few weeks and a break / close below would be needed to suggest a larger trend reversal is underway. Subsequent support seen at the 2025 low-close at 1.3583.

A breach above this key pivot zone exposes the next major technical consideration at 1.3950/78- a region defined by the 61.8% retracement of the November decline, the 52-week moving average and the 2022 swing high. Look for a larger reaction there IF reached with a weekly close above needed to suggest a more significant low is in place and potential resumption of the June uptrend. Subsequent resistance is eyed at the November high-week close (HWC) at 1.4047 and the 50% retracement of the 2026 trading range and the February low-week close (LWC) at 1.4167/84.

 

Bottom line: A nine-day rally takes USD/CAD into pivotal resistance, and the focus is on a reaction off this mark. From a trading standpoint, losses should be limited to 1.3733 IF price is heading higher on this stretch with a close above 1.39 needed to fuel the next leg of this advance towards the yearly moving average.

Keep in mind that key U.S. inflation data is due next week, with the December Consumer Price Index (CPI) scheduled for release on Tuesday. With today’s Non-Farm Payrolls report pointing to a labor market that remains steady, attention now shifts to the other side of the Federal Reserve’s dual mandate. As a result, the timing of the next rate cut is likely to hinge on the pace of inflation in the months ahead. Stay nimble into the release and watch the weekly closes here for guidance. I’ll publish an updated Canadian Dollar Short-term Outlook once we get further clarity on the near-term USD/CAD technical trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex