USD/CAD was just 60 pips away from parity but retreated on the greenback’s strength. It’s still in a tight range close to this ultimate line. This week doesn’t have too many Canadian events, so this week’s outlook will be mostly technical.
USD/CAD graph with support and resistance lines marked. Click to enlarge:
Friday’s stronger-than-expected rise in prices helped the Canadian dollar remain stable while other currencies surrendered to the US dollar. Also in the past we’ve seen a strong reaction to CPI figures.
- Leading Index: Published on Tuesday at 12:30 GMT. Canada’s leading index is based on many figures that were already released, but it still tends to be significantly different from expectations, moving the loonie. Last month’s 0.9% rise is expected to be followed by a rise of 1% this time.
- Mark Carney talks: Starts speaking on Wednesday at 17:00 GMT. The Bank of Canada is very consistent and clear with its statement about the rates – they won’t move until the end of the second quarter. Time goes by – Q2 is very close. In his public appearance, Carney might hint about the rates and speak about the state of the economy.
USD/CAD Technical Analysis
At the beginning of the week, USD/CAD went up, above the 1.02 resistance line. This was a false break that didn’t get too far. The pair then returned to the downtrend and stopped at 1.0060 before it bounced back.
The lines are similar to last week’s outlook. The pair is bound between two important lines – 1.02, which was the 2009 low and parity – 1.0000. This tight range could continue to characterize USD/CAD trading also in the next week.
Above 1.02, 1.04 is the next important line of resistance, serving as a clear support and resistance line during the recent month, and also the bottom line of a big range.
Higher, 1.0680 is a minor resistance line, being a swing high a few weeks ago. The more important line appears at 1.0780, the top boundary of the previous long-term range.
Even higher, a strong US dollar will meet further resistance at 1.0850, a past peak, and much stronger resistance at 1.1130, a line that stopped the pair many times in the past.
Looking down beyond parity, 0.98 served as a support and resistance line during the last period that USD/CAD traded below parity. Even lower, 0.97 is the next line of resistance.
I am bearish on USD/CAD
All the Canadian parameters, including employment and GDP support further strength. Parity is a huge psychological barrier, so we might see range trading for another week.
Further reading:
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For the British Pound, look into the GBP/USD forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
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