Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Canadian Dollar Forecast: USD/CAD Breaking Lower and Testing Trend Support

Canadian Dollar Forecast: USD/CAD Breaking Lower and Testing Trend Support

Nick Cawley, Strategist

USD/CAD Price, Chart, and Analysis

  • USD/CAD touching a two-week low as US dollar weakness persists.
  • Trend support is being tested.

Keep up to date with all market-moving data releases and events by using the DailyFX Calendar

The post-Jackson Hole sell-off in the US dollar is pushing the greenback down to a new two-week low with short-term support around 92.45 now under pressure. While chair Powell may have disappointed the market by not releasing a more structured timetable for tapering bond purchases, Friday’s US jobs report (NFP) may nudge the Fed into a more detailed announcement at next month’s FOMC meeting (September 21-22), giving the greenback a supportive bid. The daily DXY chart shows the current weakness in the market with both the 20- and 50-day simple moving averages broken in the last few days.

USD Forecast
USD Forecast
Recommended by Nick Cawley
Get Your Free USD Forecast
Get My Guide

US Dollar (DXY) Daily Price Chart (January – August 31, 2021)

Moving Averages (MA) Explained for Traders

On the right-hand side of the USD/CAD quote, the Canadian dollar is currently getting a bid from a stronger oil complex after oil production in the Gulf of Mexico was badly hit by the impact of Hurricane Ida. The upcoming OPEC+ meeting is expected to increase production by 400,000 barrels a day, as previously announced, and this may eventually help to unwind some of the tight conditions seen in the market. Later today, second-quarter Canadian GDP is announced (13:30 BST) with annualized growth expected to have slowed to 2.5% from a prior 5.6%. Monthly GDP is forecast to rise to 0.7% in June from -0.3% in May.

The latest sell-off in USD/CAD sees the pair now trading below recent trend support and a confirmed break will likely see the pair push lower. The supportive 20-day sma has also been broken, just, while the 50-day sma has been tested and rejected. A confirmed break lower will see a cluster of prior lows between 1.2510 and 1.2422 come into focus.

IG retail positioning (see below) confirms this mixed outlook although the sharp increase in weekly net-longs and a sharp decrease in weekly net-shorts shows traders are building further long positions in the pair.

USD/CAD Daily Price Chart (December 2020 – August 31, 2021)

Retail trader data show 73.89% of traders are net-long with the ratio of traders long to short at 2.83 to 1. The number of traders net-long is unchanged than yesterday and 28.03% higher from last week, while the number of traders net-short is unchanged than yesterday and 37.52% 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. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/CAD trading bias.

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?
Get My Guide

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.

DISCLOSURES