US Dollar Forecast: USD/CAD Rally Eyes September High

US Dollar Forecast: USD/CAD

USD/CAD stages a four-day rally as it extends the advance following the better-than-expected US Non-Farm Payrolls (NFP) report, but the exchange rate may track the negative slope in the 50-Day SMA (1.3606) if it struggles to close above the moving average.

US Dollar Forecast: USD/CAD Rally Eyes September High

USD/CAD continues to carve a series of higher highs and lows as the NFP report showed the US adding 254K jobs in September versus forecasts for a 140K print, and the exchange rate may continue to register fresh monthly highs as the ongoing expansion in employment curbs speculation for another 50bp Federal Reserve rate cut.

In turn, the US Dollar may continue to appreciate ahead of the next Federal Open Market Committee (FOMC) rate decision on November 7 even though Chairman Jerome Powell and Co. forecast ‘that the appropriate level of the federal funds rate will be 4.4 percent at the end of this year,’ and little signs of an imminent recession may lead to a growing dissent within the FOMC amid the threat of a policy error.

With that said, USD/CAD may continue retrace the decline from the September high (1.3648) as it pushes above the opening range for October, but exchange rate may hold within last month’s range should it snap the recent series of higher highs and lows.

USD/CAD Price Chart – Daily

Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView

• Keep in mind, USD/CAD trades above the 50-Day SMA (1.3607) for the first time since August after testing the March low (1.3420), and a breach above 1.3630 (38.2% Fibonacci retracement) may push the exchange rate towards the September high (1.3648).
• Next area of interest comes in around 1.3700 (38.2% Fibonacci extension) but USD/CAD may track the negative slope in the moving average if it struggles to close above the indicator.
• Failure to push above 1.3630 (38.2% Fibonacci retracement) may keep USD/CAD within the September range, with a move below 1.3520 (23.6% Fibonacci extension) bringing 1.3440 (23.6% Fibonacci retracement) back on the radar.

Additional Market Outlooks

AUD/USD Forecast: RSI Continues to Move Away from Overbought Zone

EUR/USD Vulnerable on Close Below 50-Day SMA

USD/JPY Outlook Mired by Negative Slope in 50-Day SMA

Gold Price Weakness Pulls RSI Back from Overbought Zone

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong