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Canadian Dollar Price Outlook: USD/CAD at Weekly High as Loonie Dives

Canadian Dollar Price Outlook: USD/CAD at Weekly High as Loonie Dives

Michael Boutros, Strategist

The Canadian Dollar is virtually unchanged against the US Dollar since the start of the week and we’re looking for a break of the weekly opening-range heading into US Non-Farm Payrolls on tap tomorrow morning. These are the updated targets and invalidation levels that matter on the USD/CAD charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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USD/CAD Daily Price Chart

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

Technical Outlook: In my latest USD/CAD Price Outlook we noted that Loonie was, “testing the origins of last week’s breakout and we’re looking for support ahead of 1.34 IF the broader up-trend is to remain viable– be on the lookout for possible price exhaustion / long-entries on a love lower.” Price briefly registered a low at 1.3377 before reversing sharply higher on with the advance now testing the weekly opening-range highs ahead of NFPs – look for the break for guidance.

A pivot / close back below 1.3435/37 would expose the monthly open at 1.3388 with bullish invalidation at the lower parallel / April open / 100-day moving average at 1.3340/45. A breach / close above the median-line is needed to fuel the next leg higher in price targeting the highlighted confluence zone at the 78.6% retracement of the yearly range at 1.3537.

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USD/CAD 120min Price Chart

USD/CAD Price Chart - US Dollar vs Canadian Dollar 120minute - Loonie Exchange Rate

Notes: A closer look at price action shows Loonie attempting to breach above near-term channel resistance today with the weekly opening-range capping the highs at 1.3479. A topside breach is needed to keep the immediate long-bias viable targeting the 100% extension at 1.3515 and confluence resistance at 1.3537- look for a bigger reaction there IF reached. Initial support rests at 1.3435/37 – weakness beyond this threshold would shift the focus back towards the 61.8% retracement at 1.3369 backed by the lower parallel at 1.3340/45.

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Bottom line: USD/CAD has set a clean weekly opening-range and we’re looking for the break heading into NFPs tomorrow. From at trading standpoint, the immediate focus is on a break of the 1.3435-1.3479 zone for guidance with a breach above the median-line needed to fuel the next leg high. Ultimately, I’d be looking to fade strength on a spoke towards 1.3537. Review my latest Canadian Dollar Weekly Price Outlook for look at the longer-term technical picture.

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 Sentiment - US Dollar vs Canadian Dollar Price Chart - Loonie Positioning
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD- the ratio stands at -1.31 (43.4% of traders are long) – weak bullishreading
  • Long positions are17.1% lower than yesterday and 26.6% higher from last week
  • Short positions are13.7% higher than yesterday and 26.0% 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. Traders are further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias from a sentiment standpoint.

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

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Relevant US / Canada Economic Data Releases

US / Canada Economic Calendar - USD/CAD Data Releases - Loonie 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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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