Canadian Dollar Short-term Outlook: USD/CAD Bulls Charge Ahead of NFP

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

USD/CAD rebound in focus into October open- initial resistance in view
Risk for topside exhaustion in coming days- Non-Farm Payrolls on tap
Resistance 1.3560, 1.3593, 1.3613/21 (key)- Support 1.3472 (key), 1.3420, 1.3387

The US Dollar has rallied nearly 1% off the September lows in USD/CAD with price threatening a larger bear market recovery into the monthly open. The battle lines are drawn heading into tomorrow’s highly anticipated US Non-Farm Payrolls report with key inflation data still on tap next week. These are the levels that matter on the USD/CAD short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie setup and more. Join live on Monday’s at 8:30am EST.

Canadian Dollar Price Chart – USD/CAD Daily

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

Technical Outlook: In last month’s Canadian Dollar Short-term Outlook we noted that USD/CAD was trading in a tight range just below resistance and, “From a trading standpoint, rallies should be limited to 1.3667 IF price is heading lower with a break below 1.3510 needed to mark downtrend resumption.” USD/CAD briefly registered an intraday high at 1.3647 post-FOMC with the subsequent reversal plummeting nearly 1.7% into the close of the month.

Price rebounded off the March lows at 1.3420 with the recovery now approaching Fibonacci resistance into the start of the month at the 61.8% retracement of the September decline at 1.3560. For now, the focus is on a breakout of the October opening-range which is taking shape just below this threshold.

Canadian Dollar Price Chart – USD/CAD 240min

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

Notes: A closer look at Canadian Dollar price action shows USD/CAD trading within the confines of a proposed ascending pitchfork extending off the August / September lows with Loonie straddling the weekly open at 1.3517. Initial support rests with the weekly low / 61.8% retracement of the broader December advance at 1.3472 and is backed closely by the lower parallel (currently ~1.3450s). A break below this slope would threaten downtrend resumption with such a scenario once again exposing 1.3420 and subsequent objectives at the 2023 July high at 1.3387 and the 78.6% retracement at 1.3343.

Initial resistance is eyed at 1.3560 and is backed by the 100% extension of the late-September advance at 1.3593 and 1.3613/21- a region defined by the objective March high and the 38.2% retracement of the August decline. Note that both levels converge on median-line resistance and represents arears of interest for possible topside exhaustion / price inflection IF reached.

Bottom line: USD/CAD turned from multi-month lows last month and the immediate focus remains on this near-term recovery. From at trading standpoint, losses should be limited to 1.3472 IF price is heading higher on this stretch – look for a larger reaction on test of the median-line for guidance. Ultimately, we’re on the lookout for topside exhaustion in the weeks ahead.

Keep in mind we are in the early throws of the monthly / quarterly opening-ranges with US Non-Farm Payrolls on tap tomorrow and key inflation data slated for next week (CPI). Stay nimble into the releases and watch the weekly closes here for guidance.

Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD trade levels.

Key USD/CAD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

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