Canadian Dollar Technical Outlook: Neutral
- USD/CAD pulls back slightly as bulls temporarily lose steam
- Price action pauses at a critical juncture, Loonie remains bound by psychological resistance
- Canadian Dollar remains vulnerable to commodity prices and US Dollar strength but technical levels continue to provide support and resistance for both the long and short-term move.
USD/CAD is trading at a critical juncture as the key psychological level of 1.3000 continues to hold both bulls at bay. As both the Federal Reserve and the BoC (Bank of Canada) remain committed to driving inflation lower, commodity prices and rising recession fears continue to influence the major currency pair as fundamentals remain at the forefront of risk-sentiment.
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That being said, this week’s economic docket may further assist in the catalyzation of price action, bringing additional technical levels into play.
DailyFX Economic Calendar
USD/CAD Technical Analysis
A slight pullback in prices has provided USD/CAD with a brief reprieve, allowing prices to fall back below 1.3000. With the upward trendline still intact, both bulls and bears have a few technical levels to clear.
Source: Refinitiv
As illustrated by the weekly chart below, Fibonacci levels from historical moves have continued to provide support and resistance for both the short and longer-term move. For bullish continuation to be possible, buyers will need to clear both 1.300 and the May high of 1.3079, paving the way for 1.3200.
USD/CAD Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
However, with the weekly CCI still testing overbought territory, price action is currently hovering around the 1.2966 December high while the daily CCI threatens to fall back into the ‘acceptable’ range. If bullish momentum gains traction, a retest of prior support at 1.286 could see a drop back towards the 38.2% retracement at 1.270.
USD/CAD Daily Chart
Chart prepared by Tammy Da Costa using TradingView
| Change in | Longs | Shorts | OI |
| Daily | -32% | -11% | -21% |
| Weekly | -22% | -3% | -12% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
