Canadian Dollar technical forecast: USD/CAD rally runs

Canadian Dollar technical forecast: USD/CAD weekly trade levels

• Canadian Dollar breaks out of yearly opening-range
• USD/CAD rally now approaching technical resistance
• Resistance 1.3881, 1.3950/90 (key), 1.42– support 1.3545, 1.3400(key), 1.3225

The Canadian Dollar is under pressure again this week with USD/CAD surging to fresh yearly highs. The breakout is now approaching longer-term technical resistance and we’re looking for a reaction just higher. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart.

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Canadian Dollar Price Chart – USD/CAD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In our last Canadian Dollar Technical Forecast we noted that, “A reversal off uptrend support keeps the focus on a breakout of the 1.3225-1.3545 range for guidance. From at trading standpoint, losses should be limited to the lower parallel IF price is indeed heading higher with a close above the 2023 open needed to challenge the yearly opening-range highs towards the 1.37-handle.” USD/CAD rallied more than 3.8% in the following days with the breakout registering a high today at 1.3773.

Weekly resistance now stands with the 2022 high-week close at 1.3881 and is backed closely by 1.3950/90- a region defined by the 1.618% Fibonacci extension of the 2021 advance, the 2022 swing high and the 2020 March reversal close. A breach / weekly close above this threshold would be needed to mark resumption of the broader 2021 advance.

Initial weekly support rests with the 2023 yearly open at 1.3545 with bullish invalidation now raised to the yearly low-week close at the 1.34-handle. A break / weekly close below this level would threaten a larger price reversal towards the yearly lows.

Bottom line: USD/CAD has broken out of the yearly opening-range with the advance now approaching longer-term resistance around the 2022 highs. From a trading standpoint, look to reduce long-positioning / raise protective stops on a stretch towards 1.3880 – losses should be limited to the objective yearly open IF price is indeed heading higher. I’ll publish an updated Canadian Dollar short-term outlook once we get further clarity on the near-term USD/CAD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex