The Canadian dollar is having a miserable January, as the currency headed downwards for the third straight week. USD/CAD gained over one cent on the week, closing at 1.1086. This week’s only event is GDP. Here is an outlook on the major events and an updated technical analysis for USD/CAD.
In the US, Unemployment Claims had another good week, beating the estimate. In Canada, CPI readings were below the zero level, pointing to deflation, which is indicative of an underperforming economy. The loonie took a hit after the Bank of Canada maintained rates and stated that it is concerned with weak inflation.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge: 
- GDP: Friday, 13:30. GDP is one of the most important economic indicators, and the reading often affects the movement of USD/CAD. The indicator is released monthly, unlike many other countries that post GDP each quarter. GDP has posted three straight readings of 0.3%, each time beating the estimate. The markets are forecasting a reading of 0.2% for December. Will the indicator again beat the estimate?
*All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.0954 and quickly touched a low of 1.0947, as support at 1.0945 (discussed last week) held firm. The pair then reversed directions, breaking above the 1..11 line and climbing to a high of 1.1173. The pair then retracted and closed the week at 1.1086.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
With the Canadian dollar continuing to lose ground, we begin at higher levels:
1.1617 marked a high point for the pair in July 2009, at which time the Canadian dollar posted a rally which USD/CAD dip below the 0.94 line.
1.1535 provided key support back in early 2007. It has been a resistance line since July 2009.
1.1369 fell in October 2008 as the US dollar posted sharp gains, climbing as high as the 1.21 level.
1.1124 was breached by the surging US dollar but remains in a resistance role. It is a weak line which could be tested early in the week.
The key psychological barrier of 1.10 was easily breached this week, and has reverted to a support role.
1.0945 held firm as the pair dropped slightly early last week. It has strengthened as USD/CAD trades at higher levels.
1.0853 is the next support line. 1.0723 was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory. It remains a strong support line.
1.0660 saw a lot of activity in the second half of December and continues to provide strong support.
The final support line for now is 1.0523. It was a peak back in November 2011 and has provided support since late November.
I am bullish on USD/CAD
The Canadian dollar is in trouble and has coughed up close to five cents since the start of 2014. With more QE expected from the Federal Reserve this week and the US economy showing growth, there’s more room for the USD/CAD to move upwards.
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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