Canadian Dollar Price Outlook: Loonie Gains Slam USD/CAD Into Support

The Canadian Dollar is up more than 2.7% against the US Dollar since the late-May high in USD/CAD with price now testing near-term downtrend support. These are the updated targets and invalidation levels that matter on the USD/CAD charts into the close of the month.

USD/CAD PRICE CHART - LOONIE DAILY

USD/CAD Price Chart - US Dollar vs Canadian Dollar Daily - Loonie Outlook

Technical Outlook: In my latest Canadian Dollar Price Outlook we noted that the USD/CAD recovery was approaching key topside resistance objectives at the, “1.3435/37 pivot zone with trendline confluence just higher around ~1.3460s – we’re looking for possible exhaustion off one of these two zones.” Price registered a high at 1.3432 before posting an outside-day reversal lower on the back of the FOMC interest rate decision.

The decline has now taken out the monthly opening-range lows with price now responding to confluence support at 1.3175 – a region defined by the lower median-line parallel and the 78.6% retracement of the late-January advance. A daily close below this threshold is needed to mark resumption targeting more significant support at the yearly low-day close / 100% extension at 1.3105/23 – look for a bigger reaction there IF reached.

USD/CAD PRICE CHART - LOONIE 120MIN

(Click on image to enlarge)

USD/CAD Price Chart - US Dollar vs Canadian Dollar 120min - Loonie Outlook

Notes: A closer look at price action shows Loonie trading within the confines of a descending pitchfork formation extending off the May highs with USD/CAD in consolidation just above the lower parallel. Initial resistance stands at 1.3238 backed by 1.3258 with bearish invalidation at the median-line (currently ~1.3280s).

Bottom line: The broader focus remains weighted to the downside in USD/CAD on the back of last week’s reversal – that said, the decline is now testing initial downtrend support. A good place to reduce short-exposure / lower protective stops. I’ll favor fading strength while below the median-line targeting a test of the 1.3105/23 support zone. Review my latest Canadian Dollar Weekly Price Outlook for a longer-term technical picture on USD/CAD

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