USD/CAD Forecast Apr. 20-24

The Canadian dollar had one of its best weeks in recent memory,  jumping 250 points.  USD/CAD  closed the week at 1.2224. The upcoming week is a quiet one, with  just four  releases.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The US dollar  took a beating from its Canadian counterpart,  as US  economic  reports disappointed,  led by  retail sales  and housing data. There was better news late in the week  as consumer confidence shot higher.   In Canada, a hawkish policy statement from the BOC pushed the  pair lower. Later in the week,  unexpectedly strong inflation and retail sales numbers helped the loonie soar.

[do action=”autoupdate” tag=”USDCADUpdate”/]

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

 

1. BOC Governor Stephen Poloz Speaks: Wednesday, 14:05. Poloz will speak at a financial  event in New York City. The markets will be looking for any hints as to future monetary policy.
2. Wholesale Sales: Tuesday, 12:30. This is the major event of the week. The indicator looked awful in January, declining by 3.1%. This was much lower than the forecast of -0.7%. Will the indicator rebound in the February release?
3. Annual Budget Release: Tuesday, 20:00. The  federal  government releases an annual budget, which includes expected spending, revenue and borrowing levels. If there are any surprise announcements, USD/CAD could respond with some volatility.
4. BOC Governor Stephen Poloz Speaks. Friday, 14:30. Poloz will speak at event in Washington, DC. A speech which is more hawkish than expected is bullish for the Canadian dollar.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2574 and  quickly touched a  high of  1.2646, testing  resistance at 1.2624  (discussed last week). The pair then  reversed directions and slid all the way to 1.2085.    USD/CAD recovered somewhat, closing  the week at 1.2224.

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

Technical lines, from top to bottom

With US/CAD dropping sharply, we begin at lower levels:

We begin with resistance at 1.2624. This line was tested early in the week before the pair dropped sharply.

1.2541  remains busy and switched to a resistance role. This is  a strong line.

1.2387  was easily breached during the impressive rally by the Canadian dollar. It has reverted to a resistance line.

1.2230 was  breached for the first time  since mid-January. It is a weak resistance line and could see further activity early in the week.

1.2114 is an immediate line of support.

1.1995 is providing support just shy of the symbolic 1.20 line.

1.1872 is the  final  support line for now. It was a key resistance line in February 2007.

 

I am  neutral on USD/CAD

After a spectacular run by the loonie last week, will we see a correction from USD/CAD? Although recent US numbers have not impressed, analysts expect better news in the spring, and market sentiment remains positive about the US economy. There is just one major Canadian release this week, so US releases will have a major impact on the pair’s movement.

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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.
• For the kiwi, see the NZDUSD forecast.