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Canadian Dollar Price Forecast: USD/CAD Snaps Back to Key Support

Canadian Dollar Price Forecast: USD/CAD Snaps Back to Key Support

James Stanley, Senior Strategist

Canadian Dollar, USD/CAD Talking Points:

  • USD/CAD set a fresh September high on Monday and yesterday prices snapped back to a key support zone more than 200 pips away.
  • Prices in USD/CAD are now sitting on the same 1.2631 level that held the lows last Friday.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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Earlier in the week USD/CAD brought the excitement when the pair ran up to a fresh September high, threatening a test of the prior 2021 high at 1.2950 and potentially even a re-test of the 1.3000 psychological level. That breakout had already begun to pullback by mid-day on Monday, and prices have driven through both of the higher-low supports that I had looked at previously. Now, we’re at the last stop of support that I had looked at and it’s a big one as this is the same price that’s been in-play since January.

The prices in question are at 1.2621 and 1.2631; the latter of which is the 23.6% Fibonacci retracement of the 2020-2021 sell-off while the former is the 50% marker of the longer-term 2002-2007 major move. Together, these prices create a confluent zone that’s been very active over the past month as both support and resistance.

To learn more about Fibonacci, check out DailyFX Education

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD Bigger Picture

This recent move in USD/CAD mirrors that of the US Dollar fairly well, where an early-week spike dissipated with a hastening in the move around FOMC. But, price action is price action and at this point there are but a couple of options for traders looking to build strategy around USD/CAD.

Given the push down to support combined with a show from buyers, range scenarios remain possible, looking for a push back towards 1.2700 or perhaps even 1.2750.

On the bearish side of the pair, there is breakdown potential given the re-test of this well-trafficked support zone. The 1.2500 psychological level remains of interest underneath price action and that price helps to mark the current monthly and September low in the pair. There’s also a price action swing around 1.2578 that could be used as a more nearby area of support before that 1.2500 level might come back into play.

To learn more about psychological levels, check out DailyFX Education

USD/CAD Hourly Price Chart

USDCAD Hourly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

--- Written by James Stanley, SeniorStrategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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