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Canadian Dollar Forecast: USD/CAD Breakdown Has Yearly Low in Focus

Canadian Dollar Forecast: USD/CAD Breakdown Has Yearly Low in Focus

Paul Robinson, Strategist

USD/CAD Technical Forecast: Neutral to Bearish

  • USD/CAD broke confluent support
  • Heading towards the yearly low

Canadian Dollar Forecast: USD/CAD Breakdown Has Yearly Low in Focus

Last week, USD/CAD broke below confluent support via the trend-line from June, the 200-day moving average, and the emphatic low created on March 3 at 12586. This has brought in even more selling on top of what was occurring prior to the breakdown.

This is bringing into play the yearly low where we saw a double-bottom develop around 12440. It will be important to pay attention to momentum at that juncture given the large decline we have seen in a short amount of time.

We may first see an initial reaction off support even if USD/CAD is to continue to trend lower, which is the expectation given the size of the wedge that had been developing since last year. Now that it is broken USD/CAD may head significantly lower.

If the yearly low breaks, then we will look to it as a potential source of resistance upon any retest, and 12288 will become the next major level to watch on the down-side.

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USD/CAD Weekly Chart

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USD/CAD Daily Chart

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USD/CAD Charts by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

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

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