Canadian Dollar Short-term Outlook: USD/CAD Bulls Charge Ahead of NFP

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

• USD/CAD rebound in focus into October open- initial resistance in view
• Risk for topside exhaustion in coming days- Non-Farm Payrolls on tap
• Resistance 1.3560, 1.3593, 1.3613/21 (key)- Support 1.3472 (key), 1.3420, 1.3387

The US Dollar has rallied nearly 1% off the September lows in USD/CAD with price threatening a larger bear market recovery into the monthly open. The battle lines are drawn heading into tomorrow’s highly anticipated US Non-Farm Payrolls report with key inflation data still on tap next week. These are the levels that matter on the USD/CAD short-term technical charts.

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 in a tight range just below resistance and, “From a trading standpoint, rallies should be limited to 1.3667 IF price is heading lower with a break below 1.3510 needed to mark downtrend resumption.” USD/CAD briefly registered an intraday high at 1.3647 post-FOMC with the subsequent reversal plummeting nearly 1.7% into the close of the month.

Price rebounded off the March lows at 1.3420 with the recovery now approaching Fibonacci resistance into the start of the month at the 61.8% retracement of the September decline at 1.3560. For now, the focus is on a breakout of the October opening-range which is taking shape just below this threshold.

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 trading within the confines of a proposed ascending pitchfork extending off the August / September lows with Loonie straddling the weekly open at 1.3517. Initial support rests with the weekly low / 61.8% retracement of the broader December advance at 1.3472 and is backed closely by the lower parallel (currently ~1.3450s). A break below this slope would threaten downtrend resumption with such a scenario once again exposing 1.3420 and subsequent objectives at the 2023 July high at 1.3387 and the 78.6% retracement at 1.3343.

Initial resistance is eyed at 1.3560 and is backed by the 100% extension of the late-September advance at 1.3593 and 1.3613/21- a region defined by the objective March high and the 38.2% retracement of the August decline. Note that both levels converge on median-line resistance and represents arears of interest for possible topside exhaustion / price inflection IF reached.

Bottom line: USD/CAD turned from multi-month lows last month and the immediate focus remains on this near-term recovery. From at trading standpoint, losses should be limited to 1.3472 IF price is heading higher on this stretch – look for a larger reaction on test of the median-line for guidance. Ultimately, we’re on the lookout for topside exhaustion in the weeks ahead.

Keep in mind we are in the early throws of the monthly / quarterly opening-ranges with US Non-Farm Payrolls on tap tomorrow and key inflation data slated for next week (CPI). Stay nimble into the releases and watch the weekly closes here for guidance.

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 Bulls at Major Hurdle Ahead of NFP
• Euro Short-term Technical Outlook: EUR/USD Plunges into October
• US Dollar Short-term Outlook: USD Defends Support at Fresh Yearly Low
• Australian Dollar Short-term Outlook: AUD/USD Reversal off Resistance
• British Pound Short-term Outlook: GBP/USD Breakout Eyes Resistance

Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex