The Canadian Dollar is down more than 0.28% against the US Dollar since the start of the week with the recent price rally taking Loonie within striking distance of near-term down-trend resistance heading into the FOMC interest rate decision later today. These are the updated targets and invalidation levels that matter on the USD/CAD charts.

CANADIAN DOLLAR PRICE CHART – USD/CAD DAILY

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Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Technical Outlook: In my last Canadian Dollar Price Outlook we noted to look for a reaction as USD/CAD was approaching near-term resistance at 1.3258/58- “A breach would likely fuel an accelerated rally exposing subsequent topside resistance objectives at 1.3288 with broader bearish invalidation at 1.3306.” Price registered a high at 1.33 this week before pulling back with daily resistance steady at the upper parallel / 61.8% retracement at 1.3288- a close above this threshold is needed to keep the near-term long-bias viable.

CANADIAN DOLLAR PRICE CHART – USD/CAD 120MIN

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Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes: A closer low at Loonie price action sees USD/CAD continuing to trade within the confines of a descending pitchfork formation extending off the August / September highs with breach above the medina-line late-last week fueling a rally towards the upper parallels. Initial resistance steady at the 1.3284/88 with a breach above 1.3306 needed to validate a breakout.

Support rests with the weekly open / 50% retracement at 1.3217/20 backed by the confluence support around 1.32- a break below this level would be needed to mark resumption of the broader downtrend targeting the 1.3145/55 pivot zone.

Bottom line: Loonie has carved a well-defined weekly opening-range just below downslope resistance heading into the FOMC later today. From a trading standpoint, the recovery remains vulnerable while within this formation- look for possible exhaustion on a stretch towards 1.3284/88 IF reached, targeting a break of the weekly lows. A close above 1.3307 would shift the focus back towards 1.3355. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-term USD/CAD technical

CANADIAN DOLLAR TRADER SENTIMENT – USD/CAD PRICE CHART

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• A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.63 (38.0% of traders are long) – bullish reading
• Long positions are unchanged than yesterday and 29.5% lower from last week
• Short positions are1.2% lower than yesterday and 11.9% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Yet, traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.