Canadian Dollar Short-term Outlook: USD/CAD Breaks to Six-Month High
The USD/CAD breakout has extended nearly 4% off the yearly low with bulls attempting a fourth weekly-advance. Battlelines drawn on the short-term technical charts.
Share this:
Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels
- USD/CAD rally extends nearly 4% off yearly low- breakout attempts to mark fourth-weekly advance
- USD/CAD momentum stretches into overbought territory- trade remains constructive above 200-DMA
- Resistance 1.41, 1.4167/78 (key), 1.4235- Support 1.4016/19, 1.3973/78 (key), 1.3920
The Canadian Dollar remains under pressure, with USD/CAD up more than 1.1% since the start of the month. The advance has driven momentum into overbought territory, highlighting stretched short-term conditions, yet the medium-term outlook remains constructive while above the 200-day moving average. Focus now turns to whether this rally can maintain traction as bulls attempt to push through uptrend resistance. Battle lines are drawn on the USD/CAD short-term technical charts.
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 Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Technical Outlook: In my last Canadian Dollar Short-term Outlook, we noted that USD/CAD was testing uptrend resistance and that, “from a trading standpoint, losses would need to be limited to 1.3815 IF price is heading higher on this stretch with a close above the 200-day moving average needed to mark resumption of the multi-month uptrend.” USD/CAD briefly registered an intraday low at 1.3896 later that day before reversing sharply higher with price breaking through the 200-day moving average last week. The rally is now attempting to breach the median-line of the ascending pitchfork we have been tracking off the September lows and the focus is on a weekly close above this slope to keep the immediate advance viable in the days ahead.
Canadian Dollar Price Chart – USD/CAD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Notes: A closer look at Canadian Dollar price action shows a break & re-test of the 200-day moving average last week with the bulls now attempting to mark a fourth consecutive weekly advance. Initial support rests with May high / 38.2% retracement of the yearly range at 1.4016/19 and is backed closely by the 2000-day moving average / 2022 high at 1.3973/78. Note that the 25% parallel converges on this threshold over the next few days and a slip below this slope would threaten a larger pullback within the multi-month uptrend. Subsequent support rests with the monthly open at 1.3920 with broader bullish invalidation now raised to the 2022 high-close / 2023 high at 1.3881/99.
Initial resistance is now in view at the 1.41-handle and is backed by the 50% retracement / November high at 1.4167/78- look for a larger reaction there IF reached. Subsequent topside objectives eyed with the March low at 1.4235 and the 61.8% retracement at 1.4315.
Bottom line: The USD/CAD breakout takes daily momentum into overbought territory and keeps the technical outlook tilted to the topside- the immediate focus is on today’s close with respect to the median-line. From a trading standpoint, losses should be limited to the 200-day moving average IF price is heading higher on this stretch with a close above 1.41 needed to fuel the next major leg of the advance.
Markets remain on edge over the escalating China trade dispute as concerns mount about President Xi’s move to restrict exports of rare earth minerals and magnets. Keep in mind we also get the releases of key inflation data next week from U.S. & Canada next week – stay nimble here and watch the weekly closes for guidance. Review my latest Canadian Dollar Weekly Forecast for a closer look at the longer-term USD/CAD technical trade levels.
Key USD/CAD Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts
- Australian Dollar Short-term Outlook: AUD/USD Crashes Toward Support
- Japanese Yen Short-term Outlook: USD/JPY Breakout Rips to Resistance
- US Dollar Short-term Outlook: USD Bulls Eye Pivotal Resistance Test
- British Pound Short-term Outlook: GBP/USD Facing Support– Risk Mounts
- Gold Short-term Outlook: XAU/USD Overbought Rally Hits Record Highs
- Swiss Franc Short-term Outlook: USD/CHF Faces Make-or-Break Resistance
- Euro Short-term Outlook: EUR/USD Crashes Toward Make-or-Break Support
Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY Weekly Outlook: AI earnings could overshadow the Fed and BoJ
AI sentiment has become a major driver of US Treasury yields and USD/JPY. With Microsoft, Alphabet and Amazon reporting this week, central bank decisions may have competition for traders' attention.
US Dollar Price Action Setups: EUR/USD, USD/JPY, GBP/USD, USD/CAD
The Dollar is working on its second consecutive red week and while sellers didn’t exactly pounce on fresh lows, there’s an opening door for bears to make a move.
Silver forecast: metals liquidation drags XAG/USD into $50-55 support
Silver has broken its July low and slipped into a long-term support zone as the selling in precious metals deepens. The chart shows where the metal could bottom, and next week's Fed decision may decide whether it does.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.