USD/CAD Forecast Mar. 30 – Apr. 3

The Canadian dollar showed some strength during the week,  but ended the week almost unchanged.   USD/CAD  closed just above the 1.26 line. It’s a quiet week, with just three events  this week.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

There  were no Canadian  economic releases last week.  In the US, inflation beat expectations  and New Home Sales were also stronger than expected.  However, durable goods orders and GDP missed their estimates.

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

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

1. RMPI:  Monday, 13:30. The Raw Materials Price Index measures inflation in the manufacturing sector. The index continues to post declines, but the markets are expecting a strong gain  f 5.1% in the February report.
2. GDP: Tuesday, 13:30. GDP is one of the most important economic indicators and can have a significant impact on the direction of USD/CAD. The January reading came in at 0.3%, within expectations. The estimate for February stands at 0.2%.
3. Trade Balance: Thursday, 13:30.  Trade Balance is closely linked to currency demand, as foreigners must purchase Canadian dollars to buy Canadian goods and services. The indicator was unexpectedly weak in January, with a reading of -$2.5 billion Canadian, well below the estimate of -0.9 billion. The forecast for the February report is -1.8 billion.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2583 and dropped sharply, falling  to 1.2410. The pair then  reversed directions and touched a  high of 1.2621, just shy of resistance at 1.2624 (discussed last week).  USD/CAD closed the week at 1.2608.

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

Technical lines, from top to bottom

We  start with resistance at 1.3063,  the first line above  the symbolic line of 1.30.

1.2924 was last tested in March 2009.

1.2798 has strengthened in resistance as the pair posted sharp losses last week.

1.2624 held firm as the pair reached a high of 1.2621.

1.2541 was tested but remains a support level.

1.2387  held firm in support last week as the Canadian dollar showed some strength before retracting.

1.2230 has held firm since mid-January.

1.2114 is the final support line for now.

I  am bullish  on USD/CAD

The  estimates for  GDP  and Trade Balance are not  strong, and this could hurt the loonie.  In the US, it seems that the  losing streak of poor data is reaching an end, as seen with last week’s New Home Sales and Unemployment Claims.

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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.