Canadian Dollar Forecast: USD/CAD Rejected at Key Resistance
USD/CAD is threatening to snap a two-week winning streak with price reversing sharply off technical resistance. Battle lines drawn on the Canadian Dollar weekly chart.
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Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- USD/CAD rebound off multi-year slope support falters at technical resistance
- USD/CAD decline now approaching initial support hurdles- risk for exhaustion / price inflection ahead
- Resistance 1.3965/97, 1.4149/51 (key), 1.4292– Support 1.3852, 1.3721/95 (key), 1.3504/23
The Canadian Dollar is attempting to mount a counter-offensive this week with USD/CAD trying to snap a two-week rally. A reversal off technical resistance is now approaching initial support and the first test for the US Dollar bulls. 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 my last Canadian Dollar Technical Forecast we noted that USD/CAD had, “responded to confluent uptrend support with the recovery now testing initial resistance- risk for possible price inflection here.” The area in focus was 1.3965/97- a region defined by the 52-week moving average, the 2022 swing high, and the 23.6% retracement of the yearly range. A decline of more than 1% off the high is now approaching initial support and the first major test for the bulls.
Initial weekly support rests with the 61.8% retracement of the recent advance at 1.3852 and is backed by key support at 1.3721/94- a region defined by the 38.2% retracement of the 2021 advance and the 61.8% retracement of the late-2023 advance. Look for a larger reaction there IF reached with a break / weekly close below needed to invalidate the 2021 uptrend / suggest a larger reversal is underway. Subsequent support objectives seen at 1.618% extension of the February decline / 78.6% retracement near 1.3504/23.
A break above this key pivot zone exposes confluent resistance at the 38.2% retracement / February lows at 1.4149/51- note that basic channel resistance converges on this zone over the next few days and a topside breach / close above would be needed to suggest a more significant low is in place / a larger recovery is underway. Subsequent resistance objectives eyed at the high-week reversal close at 1.4292 and the 2025 yearly open at 1.4383.
Bottom line: The USD/CAD recovery has responded to initial resistance around the yearly moving average. The immediate focus is on this pullback with initial support now in view. From at trading standpoint, losses would need to be limited to the 2022 trendline (red) IF price is heading higher on this stretch with a close above 1.3997 needed to fuel the next leg of the advance. Watch the weekly closes for guidance here. 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
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