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The Canadian dollar  was almost unchanged at the end of the week, closing slightly below the 1.111 line.  The upcoming week  is very quiet week, with just two releases. Here is an outlook on the major events and an updated technical analysis for USD/CAD.

Canadian Employment Change disappointed on Friday, countering some strong data from Building Permits and Ivey PMI. US numbers were mixed, but Nonfarm Payrolls ended the week on a high note, hitting a three-month high.

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

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:     USDCAD Forecast Mar. 10-14

  1. Housing Starts: Monday, 12:15. Housing Starts has dropped for three consecutive readings, raising concerns about the health of the housing sector. The January reading came in at 180 thousand, short of the estimate of 184 thousand. The markets are expecting an improvement in the upcoming release, with an estimate of 190 thousand.
  2. NHPI: Wednesday, 12:30. The New Housing Price Index is an important gauge of activity in the housing industry. The index continues post very small gains, with the January reading showing a gain of just 0.1%. The estimate stood at 0.2%. The markets are expecting some improvement in the February release, with the estimate standing at 0.3%.

*All times are GMT.

 

USD/CAD Technical Analysis

USD/CAD opened the week at 1.11064 and  touched a high of 1.1118, as resistance at 1.1124 (discussed last week) held firm.  The pair then dropped to a low of 1.0955  but couldn’t consolidate these gains and closed at 1.1085.

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

 

Technical lines, from top to bottom:

We  start  with resistance at 1.1617. This line  marked a high point for the pair in July 2009, at which time the Canadian dollar posted  a rally in which USD/CAD dipped below the 0.94 line.

1.1535 provided key support back in early 2007. It has been a resistance line since July 2009.

1.1369 fell in October 2008 as the US dollar posted  sharp gains, climbing as high as the 1.21 level.

1.1124 is the next line of resistance. It  held firm  last week  but  is a weak line.

The key psychological barrier of 1.10  continues to see action.  It was briefly breached last week as the Canadian dollar showed some strength, but remains in place in a support role.

1.0945 faced pressure as USD/CAD lost ground late in the week before bouncing higher. The line is currently providing strong support.

1.0853 is the next support line. 1.0723 was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.

1.0660 saw a lot of activity in the second half of December and continues to provide strong support.

The final support line for now is 1.0523.  It  was a peak back in November 2011 and has provided support since late November 2013.

 

I am bullish on USD/CAD

The  Canadian economy continues to struggle, as  weak employment numbers and  low inflation numbers weigh on the economy.  Market sentiment towards the US economy remains upbeat, although recent releases have been mixed. The Fed will likely  continue to trim QE this week, which is bullish for the US dollar.

Further reading: