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Canadian Dollar Forecast: USD/CAD, AUD/CAD, NZD/CAD

Canadian Dollar Forecast: USD/CAD, AUD/CAD, NZD/CAD

2020-01-17 20:30:00
Peter Hanks, Junior Analyst
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Canadian (CAD) Dollar Outlook:

  • The Canadian Dollar has had varying performances to start the year
  • USD/CAD has pressed higher to test resistance, but the longer-term downtrend persists
  • Where are USD/CAD, AUD/CAD and NZD/CAD headed?

Canadian Dollar Forecast

The Canadian Dollar has had a mixed performance to start the year, but some of the longer-term trends in each of the crosses in focus look to remain intact. That being said, here are some of the major levels that could pose as potential areas of interest in the weeks to come. In the meantime, follow @PeterHanksFX on Twitter for updates.

USD/CAD Outlook

USD/CAD began the year with a rebound following a multi-week slide into the end of 2019. Piercing the longstanding support at 1.3025, the brief excursion lower could hint at further weakness to come. Currently negotiating Fibonacci resistance at 1.3070, USD/CAD may look to break higher and test trendline resistance or horizontal support.

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While further bullishness may ensue, a confluence of resistance at 1.32 will make the zone difficult to surpass. Further still, the bottom in early 2020 has established a new lower-low for the pair as it looks to continue its longer-term downtrend. With this in mind, a brief rally higher may allow for an attractive entry point for eventual short side exposure as bears continue to pressure the pair over time.

USD/CAD Price Chart: Daily Time Frame (January 2018 – January 2020) (Chart 1)

USDCAD price chart

AUD/CAD Outlook

Shifting focus to AUD/CAD, the nearby 200-day simple moving average may keep a lid on bullish momentum in the shorter-term. Unlike AUD/USD, AUD/CAD has been unable to pierce the descending trendlinewhich leaves the pair with a more difficult road ahead if it is to press higher. With that in mind, AUD/CAD is an attractive opportunity for strategies looking to capitalize on Australian Dollar weakness over the medium to longer term.

AUD/CAD Price Chart: Daily Time Frame (April 2018 – January 2020) (Chart 2)

aud/cad price chart

NZD/CAD Outlook

NZD/CAD finds itself trading in a similar position to that of NZD/USD, but with an arguably weaker counterpart. Consequently, bearish retracements may lack depth compared to the more heavily traded US Dollar cross, but I am hesitant to suggest outright Kiwi strength versus the Canadian Dollar.

Furthermore, NZD/CAD still exists within a long-term downtrend, so attempting to forecast a break out at this stage is rather presumptuous. With that in mind, it may be prudent to wait for a clearer entry that lends itself to NZD/CAD weakness if employing shorter-term strategies because consistent probing of the 200DMA hints at CAD strength.

NZD/CAD Price Chart: Daily Time Frame (March 2018 – January 2020) (Chart 3)

NZD/CAD price chart

In total, Canadian Dollar strength may persist for the foreseeable future. While shorter-term weakness has materialized on some crosses, the longer-term trends look to remain in tact and this could provide evidence for a position trader looking to ride a broader move. Similarly, nearby levels on USD/CAD could provide an attractive set up for swing traders. To find out what type of trader you are, take the DailyFX DNA FX Quiz.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:How to Invest During a Recession: Investments & Strategy

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