No events are due in Canada this week, so the loonie will rock mostly on external news and technicals. Here’s an outlook.
USD/CAD daily chart with support and resistance lines marked. Click to enlarge:
Let’s start:
USD/CAD Technical Analysis
The Canadian dollar gradually strengthened during the week, and eventually closed around 1.0075, that was mentioned last week.
Looking down, minor support is found at 1.0075, just below the current close. It served as support a few weeks ago. Below, USD/CAD parity proved to be strong support, and it’s a very round number.
Just below, 0.9975 cushioned the pair’s fall in the past two months and now works as support. It’s immediately followed by the year-to-date low of 0.9930.
Further lines below were last seen in 2008: 0.98 and 0.97. Reaching these levels depends a lot on oil prices.
Looking up, 1.0140 is now a weak line, after not working as a significant line in the past week. Higher, 1.0280 remains a strong line of resistance, which hasn’t been broken in quite a while.
Higher, the 1.0380 line is a very strong resistance line after stopping USD/CAD from rising a few times in recent months, and is still far. The next line is 1.05 which capped the pair twice during the summer and is the next minor line of resistance.
Even higher, the strong 1.0680 worked as resistance in July and in August, for more than one day in each attempt to break higher. The next levels are still far – 1.0750 was a swing high during May and also the limit of a long-term range in 2009. The last line is, 1.0850, which was also a swing high back then.
I remain neutral on USD/CAD.
The Chinese rate hike might hurt the Canadian dollar and balance the Canadian fundamentals, which are OK.
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/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.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar.
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