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The Canadian Dollar is attempting to resume its advance against the US Dollar as the top performer this year with price now testing a near-term support pivot that if broken, could exposes further losses for the greenback. These are the updated targets and invalidation levels that matter on the USD/CAD charts.

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USD/CAD Daily Price Chart

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

Technical Outlook: In my last USD/CAD TechnicalOutlook we noted that the price was rebounding from daily trend support with a hold below resistance at 1.32 needed to keep the focus lower. An early month recovery registered a high at 1.3340 before puling back with the decline now once again approaching the 1.32-handle. Note that the February opening-range remains intact with Loonie attempting to close below the 100-day moving average today around ~1.3230.

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USD/CAD 120min Price Chart

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

Notes: A closer look at price action shows USD/CAD trading within the confines of a descending pitchfork formation extending off the monthly highs with the median-line further highlighting near-term support at the 50% retracement at 1.3204. A break below would exposes subsequent support objectives at the 61.8% retracement / 100% extension at 1.3166/72 backed closely by the 200-day moving average at ~1.3142 and the monthly open at 1.3123 – look for a larger reaction there IF reached. Initial resistance stands at the weekly open at 1.3250 with a near-term bearish invalidation now lowered to 1.3282.

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Bottom line: Looking for a daily close below the 100-day moving average with the immediate focus on a reaction down at the 1.32-handle. From a trading standpoint, a good place to reduce short-exposure and lower protective stops – look for failure ahead of the upper parallel / 1.3282 on a rebound IF price is indeed heading lower. Review my latest USD/CAD Weekly Technical Outlook for a longer-term look at the weekly price charts.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

USD/CAD Trader Sentiment

USD/CAD Trader Positioning
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.05 (48.8% of traders are long) – neutralreading
  • Traders have remained net-short since February 6th; price has moved 0.7% higher since then
  • Long positions are14.1% higher than yesterday and 49.3% higher from last week
  • Short positions are 3.8% higher than yesterday and 2.7% lower 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 and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.

See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!

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Relevant USD/CAD Data Releases

US / Canada Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex