Canadian Dollar Forecast: USD/CAD Plummets on Trump Tariff Delay

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

USD/CAD exhausts at uptrend resistance- marks outside-weekly reversal off multi-decade high
USD/CAD threat for larger bull-market correction– Powell testimony, U.S CPI on tap
Resistance 1.4383, 1.4538, 1.4660/90 (key)– Support 1.4115/76 (key), 1.3990, 1.3881/99

The Canadian Dollar marked a massive outside-weekly reversal last week with USD/CAD turning sharply off uptrend resistance after President Trump delayed Canadian tariffs. The decline has broken the September uptrend and threatens a larger correction within the multi-year advance. Battle lines drawn on the USD/CAD weekly technical charts.

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 the, “USD/CAD January opening-range is set just below confluent uptrend resistance- look for the breakout in the days ahead for guidance. From a trading standpoint, losses should be limited to the median-line / 1.4115 for the December rally to remain viable with breach above 1.4538 needed to fuel the next major leg of the advance.”

USD/CAD surged two-weeks later with price briefly registering an intraweek high at 1.4793 before reversing sharply lower to post the largest single-week range since March of 2020, and the largest single-week decline since March 2023- both instances marked multi-week highs before pulling back.

Weekly support rests with the 2016 high-week close (HWC) / 38.2% retracement of the December 2023 advance at 1.4115/76. Note that the median-line converges on this threshold over the next few weeks and losses would need to be limited this pivot zone for the September rally to remain viable. Losses below this slope would suggest a lager trend reversal is underway towards the 2023 high at 1.3990 and the 2022 HWC / 2023 high at 1.3881/99- both levels of interest for possible downside exhaustion / price inflection IF reached.

Yearly-open resistance stands at 1.4383 and is backed by the 2016 close high at 1.4538. Key resistance remains unchanged at 1.4660/90- a region defined by the 78.8% retracement of the 2001 decline, the 1.618% extension of the December 2023 advance, and the 2016 / 2020 swing highs. A breach / close above this threshold is needed to fuel the next major leg of the advance towards the 100% extension of the 2021 advance at 1.5063.

Bottom line: USD/CAD reversed off confluent uptrend resistance last week with the decline breaking below the September uptrend. From a trading standpoint, look to reduce short-exposure / lower protective stops on a drop towards the median line (1.4175)- rallies should be limited to 1.4383 IF price is heading lower on this stretch.

Keep in mind we get the release of key U.S. inflation and retail sales data this week- stay nimble into the releases and watch the weekly close for guidance. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

US/ Canada Economic Data Release

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. 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. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.