Canadian Dollar Forecast: USD/CAD Threatens Yearly Downtrend
The USD/CAD breakout stalled at the yearly downtrend last week with the August opening-range taking shape just below. Battle lines drawn on the weekly technical chart.
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Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- USD/CAD July breakout fails at multi-month downtrend resistance- August opening range takes shape below
- USD/CAD Focus is on pullback depth as bulls defend the breakout zone- Canada Employment, U.S. CPI on tap
- Resistance 1.3815/35 (key), ~1.3910, 1.3974-1.4018– Support 1.3733, 1.3583, 1.3504/23 (key)
USD/CAD broke out of a multi-week range last week but failed to break out of the 2025 downtrend. Price has since pulled back, with the August opening-range now forming just below this key slope. The focus is on whether this retreat marks a deeper reversal or simply a retest of broken resistance. Battle lines drawn on the USD/CAD weekly technical chart heading into Canada employment / US CPI.
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 my last Canadian Dollar Technical Forecast we noted that USD/CAD was, “now testing confluent resistance of a multi-month downtrend- Fed on tap. From a trading standpoint a good zone to reduce portions of long-exposure / raise protective stops. Losses should be limited to 1.3733 IF price is heading higher on this stretch with a close above the March trendline needed to fuel the next major leg of the advance.” USD/CAD briefly rallied through resistance last week but failed to close above with prices pulling back more than 1.1% off multi-month highs.
The decline is testing support this week at the yearly low-week close at 1.3733 and we’re looking for a reaction off this mark. Note that the weekly and monthly opening-ranges are taking shape just above and a breakout may offer some guidance here in the days ahead.
The resistance zone in focus remains 1.3815/35- a region defined by the 100% extension of the June advance, the 61.8% retracement of the May decline, and the broader 23.6% retracement of the yearly range. Note that the March trendline converges on this threshold this week and a close above is needed to suggest a more significant low is in place / a larger trend reversal is underway. Subsequent resistance objectives eyed at the 2022 trendline (currently near ~1.3910) and the 52-week moving average, near ~1.3958. The next major technical consideration is eyed the 1.618% extension / 2022 high / 38.2% retracement of the yearly range at 1.3974-1.4019- look for a larger reaction there IF reached.
A break lower from would threaten a larger setback towards trend support with subsequent objectives seen at the 2025 close low at 1.3583 and 1.3504/23- a region defined by the 1.618% extension of the February decline and the 78.8% retracement of the late-2023 advance. Losses below this threshold would mark resumption of the yearly downtrend / threaten another bout of accelerated losses for the US Dollar.
Bottom line: USD/CAD responded to multi-month downtrend resistance last week with the August opening-range taking shape just below. From a trading standpoint, the immediate focus is on a breakout of the 1.3733-1.3835 range with the broader June advance vulnerable while below channel resistance. The weekly low should hold IF price is heading higher on this stretch.
Keep in mind we get the release of Canada employment data tomorrow with U.S. CPI on tap Tuesday. Stay nimble into the releases and watch the weekly closes 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
Follow Michael on X @MBForex
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