Canadian Dollar Forecast: USD/CAD Reverses Ahead of June High
USD/CAD appears to be reversing ahead of the June high (1.3798) as it carves a series of lower highs and lows.
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Canadian Dollar Outlook: USD/CAD
USD/CAD appears to be reversing ahead of the June high (1.3798) as it carves a series of lower highs and lows, and the exchange rate may give back the advance from the monthly low (1.3557) as it snaps the range bound price action from last week.
Canadian Dollar Forecast: USD/CAD Reverses Ahead of June High
Keep in mind, USD/CAD closed above the 50-Day SMA (1.3722) for the first time since March as it climbed to a fresh monthly high (1.3775) during the previous week, and the exchange rate may continue to trade within the June range should it no longer respond to the negative slope in the moving average.
Canada Economic Calendar
At the same time, data prints coming out of Canada may sway USD/CAD as the Retail Sales report is anticipated to show a 1.1% contraction in May, and signs of a slowing economy may produce headwinds for the Canadian Dollar as it puts pressure on the Bank of Canada (BoC) to pursue an accommodative policy.
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In turn, a sharp decline in household spending may push the BoC to adopt a dovish forward guidance as ‘the economy is expected to be considerably weaker in the second quarter,’ but a better-than-expected Retail Sales report may keep Governor Tiff Macklem and Co. on the sidelines as the ‘Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.’
With that said, USD/CAD may continue to carve a bearish price series ahead of the next BoC meeting on July 30 as it seems to be reversing ahead of the June high (1.3798), and the recovery from earlier this month may turn out to be temporary as the exchange rate fails to hold above last week’s low (1.3670).
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD carves a series of lower highs and lows after struggling to test the June high (1.3798), and a close below 1.3630 (38.2% Fibonacci extension) may lead to a test of the monthly low (1.3557).
- Failure to defend the June low (1.3540) may push USD/CAD toward the 1.3510 (50% Fibonacci extension) to 1.3520 (23.6% Fibonacci extension) region, with the next area of interest coming in around the October low (1.3473).
- At the same time, lack of momentum to push/close below 1.3630 (38.2% Fibonacci extension) may keep USD/CAD within the June range, with a move above the 1.3700 (38.2% Fibonacci extension) to 1.3710 (78.6% Fibonacci retracement) zone bringing the monthly high (1.3775) on the radar.
Additional Market Outlooks
USD/CHF Struggles After Testing Former Support Zone
EUR/USD Coils Ahead of ECB Interest Rate Decision
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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