Canadian Dollar Weekly Price Outlook: Loonie Strength To Tame USD/CAD

In this series, we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The Canadian Dollar is up more than 0.4% against the US Dollar this week with USD/CAD pullback back from confluence technical resistance. These are the updated targets and invalidation levels that matter on the USD/CAD weekly chart.

USD/CAD WEEKLY PRICE CHART

(Click on image to enlarge)

USD/CAD Price Chart - US Dollar vs Canadian Dollar Weekly

Notes: In last month’s USD/CAD Weekly Technical Outlook we noted that price was, “approaching a critical weekly support confluence at 1.3037/57 and we’re looking for a reaction in price on a drop into this zone early in the month. From a trading standpoint, a good area to reduce short-exposure / lower protective stops.” Price registered a low at 1.3068 before rebounding with the advance now trading below confluence resistance at 1.3435/37- a region defined by the 61.8% retracement of the December decline and the 2017 yearly open. A breach/close above this threshold is needed to fuel the next leg higher targeting 1.3647/86.

Weekly support now stands at the highlighted slope confluence around ~1.3140 with broader bullish invalidation steady at 38.2% retracement / 200-day moving average at 1.3052/70. Note that weakness beyond this level would also constitute a break of the yearly opening-range lows and would risk substantial losses in price with such a scenario targeting the October low-week reversal close at 1.2939.

Bottom line: We’re looking for a pivot off the 1.3435/37 confluence resistance zone with the immediate long-bias vulnerable while below. From a trading standpoint, a good place to reduce long exposure / raise protective stops and be on the lookout for possible price exhaustion. I’ll publish an updated USD/CAD Price Outlook once we get further clarity in near-term price action. Keep in mind the FOMC interest rate decision is on tap next week.

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