Home USD/CAD Forecast June 30-July 4

The Canadian  dollar  continues to improve,  as USD/CAD  dropped  close to 100 points for the second straight week. The pair closed at 1.0662.  This week has just two releases on the calendar – GDP and Trade Balance. Here is an outlook on the major events and an updated technical analysis for USD/CAD.

US GDP for Q1 shocked the markets with a decline of 2.9%, and the Canadian dollar took advantage.  Unemployment Claims and Consumer Sentiment were close to the estimates. In Canada, manufacturing inflation posted declines, pointing to weakness in the manufacturing sector.

[do action=”autoupdate” tag=”USDCADUpdate”/] USD/CAD daily chart with support and resistance lines on it.

Click to enlarge:

USD_CAD June 30- July4_technical

  1. GDP:  Monday, 12:30. GDP is the primary gauge of economic activity and should be treated as a market mover. Unlike most other major economies, Canadian GDP is released on a monthly basis. The indicator has been dropping in recent  months, and fell to 0.1% last month, matching the forecast.  The  markets are expecting a small gain on 0.2% in  the upcoming release.
  2. Trade Balance:  Thursday, 12:30. Trade Balance is closely linked to currency demand, as foreigners must purchase Canadian dollars in order to by Canadian exports. The indicator came in at -$0.6 billion in May, well off the estimate of -$0.2 billion and the first deficit since January. The estimate for the June release stands at -$0.3 billion.

* All times are GMT.


USD/CAD Technical Analysis

USD/CAD  opened the week at 1.0753, which was the high of the week. The pair then  dropped to  the  support level  of 1.0660 (discussed last week), and closed  the week at 1.0662.

Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]


Technical lines, from top to bottom:

We  start  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  started the week as a weak line but has some breathing room as    the pair trades at lower  levels.

1.0737  was easily breached by the pair and has reverted  to a  resistance role. This line was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.

1.0660 held firm in support as the Canadian dollar continues to  trade at six-month lows. The pair saw a lot of activity in the second half of December.

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 next support line. This line marked the start of a rally by the pair last October, which saw the US dollar climb above the 1.12 line.

1.0182 is the final support level for now. This line has  held steady  since  September.


I am  bullish on USD/CAD

The Canadian dollar  continues to improve against its US counterpart.  Can it continue the upward movement?  The dismal US GDP could weigh on the greenback this week, so there is room for the  loonie to gain  further ground.

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.