Browsing: Canadian Dollar Forecast

Looking for the latest outlook for this week? Check the full section: Canadian Dollar Forecast

The Canadian dollar continues to show strength. It held to the range and gained 180 pips this week against the greenback. No events are due in Canada in this thin-volume week, so the outlook is only technical this time.

USD/CAD  chart with support and resistance lines marked on it. Click to enlarge:

USD/CAD Forecast

Weaker-than-expected GDP didn’t hurt the loonie’s ride, nor did the modest retails sales release. Let’s examine the charts:

USD/CAD Technical Analysis

USD/CAD traded between 1.07 and 1.0447 in the past week, a lower range than the previous week. The range of 1.04 to 1.0750 continues to dominate this pair’s trading. The lines haven’t changed from last week’s outlook.

Above 1.0750, 1.0850 was the previous peak and is a minor resistance line. Further above, 1.1130 is a very important resistance line, working as such more than once this year.

Looking down below 1.04, 1.02 is the next support line. It was the year-to-date low, and probably won’t be challenged. Also parity, the ultimate support line, looks too far now.

I am still neutral on USD/CAD

The strength of the Canadian dollar is quite impressive, and there are reasons for this. Strong inflation figures, great employment numbers and great housing figures. But a break downwards probably won’t happen this week.

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USD/CAD Technical Analysis, Canadian dollar forecast ► preview of the key events that move the Canadian dollar (C$) during the upcoming week. Here are some general data. Scroll down for the latest USD/CAD outlook

USD/CAD Characteristics

The Canadian dollar, aka “the loonie” (the loon appears on the 1 dollar coin) is a commodity currency. Oil is Canada’s primary exports and fluctuations in the “black gold” move CAD as well. The C$ also moves with also with stocks, as it is considered a “risk currency”. However, CAD  also depends heavily on demand from its No. 1 trading partner and southern neighbor, the USA. Trump’s trade wars hurt CAD. NAFTA renegotiations are not going anywhere fast.

Dollar/CAD tends to react relatively slowly to important economic data from Canada. Retail traders thus have a better level playing field that can jump into a trade even without the most sophisticated algorithmic tools. Even the Canadian jobs report tends to result in a relatively long move.

USD/C$ technical trading is OK: not choppy and tough, but neither fully respecting lines of support and resistance. Higher market volatility and trading volume make it more predictable.

Dollar/CAD Recent Moves

The Bank of Canada raised rates in two consecutive meetings, pushing the currency higher. However, this short cycle came to screeching halt alongside a slowdown in the economy and worries about inflation.

From the post-hike lows at the 1.20 handle, the pair began a correction phase and topped 1.29. However, the rise in oil prices due to some shortages and some profit taking stabilized the loonie. Another factor to watch is the housing situation in Toronto, Vancouver, and Montreal, which is worrying.

Canadian rate hikes, US demand and the price of oil will continue guiding USD/CAD.

Latest weekly Canadian dollar forecast

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