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Canadian Dollar Forecast: USD/CAD, GBP/CAD, AUD/CAD, CAD/JPY

Canadian Dollar Forecast: USD/CAD, GBP/CAD, AUD/CAD, CAD/JPY

2020-02-09 02:00:00
James Stanley, Currency Strategist
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Canadian Dollar Technical Forecast

  • The Canadian Dollar remained on the move following the January BoC driver.
  • USD/CAD price action remains near a key area of resistance.
  • CAD/JPY bounced from longer-term support, while AUD/CAD nears a key area on the chart.

USD/CAD Technical Outlook

It was another week of strength in USD/CAD, even as the pair approached a zone of resistance that’s held the highs in the pair for the past four months. USD/CAD has now gained for five consecutive weeks, helped along by the shift at the Bank of Canada around the January rate decision. As USD-strength has come roaring back in 2020 trade, the addition of CAD-weakness has made for an especially strong trend in USD/CAD, pushing the pair from a 2020 open below the 1.3000 handle all the way up to the 1.3300 area which has become a familiar zone of resistance in the pair.

Of note is the fact that USD/CAD tested the 1.3300 level every trading day throughout the week; each time sellers holding resistance at-or-around this level. Given this week’s resistance in the proximity of longer-term resistance, combined with overbought readings showing on the Daily chart, chasing this trend higher could be a challenge and, as such, the forecast will be set to neutral on the pair.

For very aggressive traders, there may even be reversal potential brewing in this backdrop.

Technical Forecast for USD/CAD: Neutral

USD/CAD Daily Price Chart

USDCAD Daily Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD BEARISH
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Change in Longs Shorts OI
Daily 10% 9% 10%
Weekly 7% -31% -24%
Current Retail Sentiment in USD/CAD
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GBP/CAD Gives Back All of Last Week’s Gains

The British Pound got smashed this week as fears around Brexit re-entered the equation. While the final week of January brought a sizable bounce into the pair, that was entirely taken-out and then some as sellers came back into the mix.

GBP/CAD can remain an interesting option for CAD-strength scenarios away from the US Dollar. On the four-hour chart below, near-term support levels can help to guide the approach, with Fibonacci levels at 1.7127 and 1.7061 sitting just below current price action.

GBP/CAD Technical Forecast: Bearish

GBP/CAD Four-Hour Price Chart

GBPCAD Four-Hour Price Chart

Chart prepared by James Stanley; GBPCAD on Tradingview

AUD/CAD Reflexive Response Back to Support

It was a battle between two weak currencies this week in AUD/CAD. While both commodity currencies lost ground against the US Dollar, CAD weakness outpaced AUD weakness in the first few days of this week while that theme reversed for the final two trading days. Along the way, an assist at resistance came-in at the 50% marker of the post-Financial Collapse move, spanning the low from 2008 up to the 2012 high. This same level helped to set support in November and December of last year, finally succumbing to selling pressure in January of 2020.

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With this price now showing up as resistance, combined with a vulnerable level of support sitting just underneath current price action, the forecast will be set to bearish for next week in AUD/CAD.

AUD/CAD Technical Forecast: Bearish

AUD/CAD Daily Price Chart

AUDCAD Daily Price Chart

Chart prepared by James Stanley; AUDCAD on Tradingview

CAD/JPY Catches a Reprieve

Three weeks ago CAD/JPY ran into a bearish trend-line, and the two weeks following saw decisive bearish moves price-in on the chart. Sellers pushed all the way down to Fibonacci support around 81.90, which finally brought some buyers into the mix this week as the pair caught a reprieve.

But, given current drivers, CAD/JPY can remain one of the more attractive venues if looking for CAD-weakness; incorporating the potential for risk-aversion flows in the Japanese Yen. The forecast for next week will be set to bearish on the pair.

CAD/JPY Technical Forecast: Bearish

CAD/JPY Weekly Price Chart

CADJPY Weekly Price Chart

Chart prepared by James Stanley; CADJPY on Tradingview

--- Written by James Stanley, Strategist 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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