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The Canadian dollar  lost over a cent last week, as USD/CAD closed above the 1.12 level. The loonie is currently trading at its lowest level since July 2009. It’s a very quiet week coming up, with just one release on the schedule. Here is an outlook on the major events and an updated technical analysis for USD/CAD.

Canadian retail sales and inflation numbers looked solid on Friday, but the Canadian dollar didn’t show much reaction. In the US, Unemployment Claims beat the forecast for a third straight week, and Janet Yellen’s comments that interest rate could rise early next year sent the US dollar surging higher.

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

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:     USDCAD Forecast Mar. 24-28

  1. BOC Deputy Governor Timothy Lane Speaks: Monday, 16:30. Lane will speak at an event in Toronto.  A speech  that  is more hawkish than expected  is bullish for the Canadian dollar.

*All times are GMT.

 

USD/CAD Technical Analysis

USD/CAD  started the week at 1.1096 and dropped to a low  of 1.1025,  as the key level of 1.10  remained intact (discussed last week).  The pair  then reversed directions  and touched a high of 1.1278. USD/CAD  closed the week at 1.1218.

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

 

Technical lines, from top to bottom:

With the Canadian dollar  losing ground last week, we  start at higher levels:

1.1751 was a key line of resistance  throughout  2007. It was last breached in May 2009.

1.1617 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 has switched to a  support role with the Canadian dollar losing ground. USD/CAD has been putting pressure on this line since late February and finally punched through last week.

The key psychological barrier of 1.10  held firm as the pair weakened early in the week.  It starts the week as a strong line, with the pair trading above the 1.12 level.

1.0945 continues to provide the pair with 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 is the final support level for now.  It saw a lot of activity in the second half of December and continues to provide strong support.

 

I am bullish on USD/CAD

Some solid Canadian data couldn’t put a dent in the strong US dollar, which hit five-year highs against the Canadian currency. The taper train continues to chug along and this has helped the US dollar. US employment numbers have generally been positive. Strong numbers out of the US this week could add further momentum to the US dollar’s rally.

Further reading: