Canadian Dollar Short-term Outlook: USD/CAD Trump Rally Faces Fed
Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels
- USD/CAD election rally erases weekly losses- risk for exhaustion/price inflection into technical resistance just higher
- USD/CAD weekly opening-range break imminent- FOMC rate decision, Canada Employment report on tap
- Resistance 1.3977/90 (key), 1.4085, 1.42- Support 1.3881/99, 1.3825/32 (key), 1.3792
The US Dollar is virtually unchanged this week with the Trump election-rally erasing an early-week loss of nearly 1%. The rebound puts a weekly opening-range breakout in focus with major technical resistance seen just higher. Battle lines drawn on the USD/CAD short-term technical charts ahead of the Fed.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Technical Outlook: In last month’s Canadian Dollar Short-term Outlook we noted that USD/CAD was trading just below resistance and that, “losses should be limited to the median-line IF price is going for a breakout here with a close above 1.3835 needed to fuel the next leg in price.” Price straddled resistance for days before breaking higher with USD/CAD exhausting into uptrend resistance into November open.
The pullback rebounded off technical support yesterday with the post-election rally now testing the weekly-open at 1.3954. Key resistance remains unchanged at 1.3978/90- a region defined by 2022 high and the 2020 March weekly-reversal close. Note that the 75% parallel converges on this threshold over the next few days and while the broader outlook remains constructive, the immediate advance may be vulnerable while below this hurdle.
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 USD/CAD continuing to trade within the confines of the ascending pitchfork we’ve been tracking off the September/October lows with the upper parallel further highlighting the 1.3978/90 resistance barrier.
Initial support rests with the 2023 high-close / 2023 high at 1.3881/99 and is backed by the August high-day close (HDC) / 23.6% retracement at 1.3825/32. Note that the weekly opening-range is preserved heading into Thursday, and we’ll be looking for a breakout to offer further guidance on our near-term directional bias.
A break lower exposes the June high at 1.3792 and 38.2% retracement of the September rally at 1.3753- We’ll reserve this threshold as our bullish invalidation level and a break / close below the lower parallel would be needed to suggest a more significant high was registered last week / a larger trend reversal is underway.
A topside breach / close above the upper parallel / 1.3990 is needed to mark uptrend resumption with such a scenario likely to fuel another accelerated breakout towards subsequent resistance objectives at 1.4085 and the 1.42-handle.
Bottom line: USD/CAD has erased the weekly losses with the post-election rally once again threatening a test of technical resistance just higher. While the broader outlook remains constructive, the immediate advance may be vulnerable while below 1.40. From a trading standpoint, the immediate focus is on a breakout of the weekly opening-range- losses should be limited to the median-line IF USD/CAD is heading higher on this stretch with a close above the upper parallel needed to fuel the next major leg in price.
Keep in mind the Federal Reserve interest rate decision is on tap tomorrow with Canada jobs data slated Friday. Stay nimble into the releases and watch the weekly close here for guidance. Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD trade levels.
Key USD/CAD Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts
- Gold Short-term Outlook: XAU/USD Plunges on Trump Victory- Fed on Tap
- Swiss Franc Short-term Outlook: USD/CHF Rally Vulnerable into Fed
- Japanese Yen Short-term Outlook: USD/JPY Stalls into US Election, Fed
- British Pound Short-term Outlook: GBP/USD Bears Charge Support
- Euro Short-term Outlook: EUR/USD Rebound Tempts Breakout Ahead of NFP
- US Dollar Short-term Outlook: USD Bulls Relent at Resistance
- Australian Dollar Short-term Outlook: AUD/USD Bears Charge 6600
Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024