The Canadian dollar climbed to six-month highs last week, as USD/CAD dropped about 100 points last week, closing at 1.0756. This week’s sole release is RMPI. Here is an outlook on the major events and an updated technical analysis for USD/CAD.
The Canadian dollar posted strong gains thanks to improved readings from Canadian inflation and retail sales numbers. In the US, the Federal Reserve said interest rates would remain at low levels for the foreseeable future. Unemployment Claims and the Philly Manufacturing Index both improved in May.
[do action=”autoupdate” tag=”USDCADUpdate”/] USD/CAD daily chart with support and resistance lines on it.
Click to enlarge: 
- RMPI: Friday, 12:30. The Raw Materials Price Index measures inflation in the manufacturing sector. The index dropped to 0.1% in May, a five-month low. This was well below the estimate of 1.2%. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 1.3%. Will the index follow through with a strong reading?
* All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.0859 and touched a high of 1.0894. The pair then reversed directions and dropped all the way to 1.0752, as resistance at 1.0737 (discussed last week) held firm. USD/CAD closed the week at 1.0756.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
We begin with resistance at 1.1369. This line was breached in October 2008 as the US dollar posted sharp gains, climbing as high as the 1.21 level. This line has remained steady since July 2009.
1.1124 remains a strong resistance line. It has held firm since late March.
The psychological barrier of 1.10 has provided resistance since May, and has some breathing room with the Canadian dollar trading at higher levels. This is followed by resistance at 1.0945.
1.0815 was breached last week, as the Canadian dollar improved late in the week. This line has switched to a resistance role.
1.0737 held firm as USD/CAD dropped to six-month lows. This line was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.
1.0660 saw a lot of activity in the second half of December and continues to provide strong support.
1.0526 has been a strong support line since late November. 1.0422 was a key support line in mid-November.
1.0271 is the final support level for now. This line marked the start of a rally by the pair last October, which saw the US dollar climb above the 1.12 line.
I am neutral on USD/CAD
The Canadian dollar looked sharp last week, gaining about 100 points. Can it continue the upward movement? Both US and Canadian numbers looked good late in the week, but the US recovery has proceeded at a faster clip than that north of the border. With the Canadian dollar at its strongest since early January, we could see a downward correction.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- USD/CAD (loonie), check out the Canadian dollar.
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