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Canadian Dollar Forecast: USD/CAD Remains in The Clutches of The US Dollar

Canadian Dollar Forecast: USD/CAD Remains in The Clutches of The US Dollar

Nick Cawley, Strategist

USD/CAD Price, Chart, and Analysis

  • USD/CAD looks to the greenback for guidance.
  • Retail traders remain long USD/CAD.

USD/CAD traders will likely be looking at the recent performance of the pair in despair with little price action or volume to suggest conditions are ripe for entering a trade. And this looks set to be the case for the next few days with the Canadian economic docket light until mid-next week, leaving US data and Fed speak surrounding the greenback, as the main market driver for USD/CAD. This being the case, then it is probably best to look at the US dollar outright, via the DXY, to give traders a cleaner set-up.

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The current USD/CAD spot price however does sit at an interesting point in the middle of a cluster of simple moving averages. All three smas are within around 60 basis points of each other, with the 20-dsma pointing lower, the 50-dsma pointing higher while the pair sits on top of a neutral 200-dsma. Volatility measured by the 14-day ATR is at multi-week lows while the CCI indicator is neutral. While these low volatility conditions may continue, complacency needs to be avoided as a relatively sharp break, one way or the other, can quite easily occur in low volume/low volatility markets. As such, if traders do want to take on a USD/CAD position, then close attention should be paid to stop losses and overall trader discipline to mitigate any unexpected breakout.

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Moving Averages (MA) Explained for Traders

USD/CAD Daily Price Chart (November 2020 – August 12, 2021)

Retail trader data show 63.53% of traders are net-long with the ratio of traders long to short at 1.74 to 1. The number of traders net-long is 5.32% lower than yesterday and 4.46% lower from last week, while the number of traders net-short is 10.60% higher than yesterday and 0.21% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.

USD/CAD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 8% -1% 2%
Weekly 12% -3% 1%
What does it mean for price action?
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What is your view on USD/CAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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