Never miss a story from Tyler Yell

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Tyler Yell

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Canadian Dollar Rate Forecast Key Takeaways:

  • The ONE Thing: In anticipation of a trade deal, the Canadian Dollar strengthened to the strongest level in two months on the hopes that the deal with Mexico and the United States will open the door for a positive outcome for the Canadian Economy despite US President Trump’s threats that Canada could be “left out.”
  • Canadian Economic data is consistently outpacing economists’ expectations per the Citi Economic Surprise Index. The strong beats could put the Bank of Canada in a more positive stance than previously expected that could further support the CAD as USD may trade softer as Fed action is fully in the price.
  • Technical Outlook: The Canadian Dollar has accelerated recently below the 100-DMA as well as the 200-Week DMA suggesting that momentum may build in favor of the Canadian Dollar and against the US Dollar.

Key Technical Levels for Canadian Dollar Rate to US Dollar:

  • Resistance: C$1.3001, March 7 high
  • Spot: C$1.2922
  • Support: C$1.2818, 50% Fibo of 2018 range

Canadian Economic Data is Strongly Beating Expectations

Central bankers are infamously data dependent, and that could be a good thing for Canadian Dollar bulls. A look to the Citi Economic Surprise Index for Canada shows a sharp turnaround in economic data that Stephen Poloz, head of the Bank of Canada, and his crew will have a hard time ignoring.

The Bank of Canada has sat on the fence on whether to pushtoward a tighter monetary policy regime as trade wars and NAFTA negotiations linger. Recent developments of a one-two punch of positive North American Trade Deals and little evidence that the barking between CN President Xi Jinping and US President Trump are having material negative effects, and if anything, may lead to more trade, not less.

The Canadian Economy Is Humming, Eh?

Please add a description for the image.

Chart Created by Jake Schoenleb, @SchoenlebFX, Source: Citi, Bloomberg

USD/CAD Breakdown Turns Focus to 50% Fibo at C$1.2818

Please add a description for the image.

Chart Source: IG Charting Package, IG UK Price Feed. Created by Tyler Yell, CMT

USD/CAD has strongly broken below rising support showing underlying CAD strength. The issue traders need to address is the longer-term trendline resistance shown above, and what it could mean to the US Dollar if it holds. Institutions hold excessive bullish sentiment and long positions on USD that may unwind and could take this pair lower still.

If Leveraged Funds Stop Buying US Dollar Index, USD/CAD May Fall

Please add a description for the image.

Chart source: CoT: Bullish USD Bets Continue to Grow as Trend Comes into Question

The key indicators on the chart are Andrew’s Pitchfork that had held USD/CAD on the move higher as well as the 100-DMA, both of which recently failed to hold up the price that was supported by the breakdown on the MACD (5, 34, 5.) The MACD shows a key breakdown after bearish divergence, and could argue that we’re no longer sitting with a broad US Dollar bullish bias despite institutional positioning.

The levels to watch with keen focus are C$1.2818 and C$1.3001 per USD. A break below C$1.2818 would argue the USD strength is cooling off and may show that USD/CAD bears are set to enjoy H2 2018

Forex Trading Resources to Support Your Trading

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feedhas intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we watch.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Discuss this market with Tyler in the live webinar, FX Closing Bell, Weekdays Monday-Thursday at 3 pm ET.

Talk markets on twitter @ForexYell

Join Tyler’s distribution list.