Canadian Dollar Price Outlook – USD/CAD Looking to Extend Rally
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USD/CAD Technical Highlights:
- USD/CAD is in breakout territory
- A little more strength can get it into open space
The theme this week has been widespread intervention to combat economic weakness as a result of the coronavirus. The Fed and BoC cut rates by 50-bps each. There was little net effect from the two actions outside of some very short-term USD/CAD volatility.
Looking at the weekly chart, the US Dollar is well positioned to rally against the Canadian Dollar. With price having taken out the 2016 trend-line (neatly tied to a parallel running on the underside of the past four years), and also breaking above the September high at 13382, the upside appears to have been softened up for USD/CAD to keep extending.
This is the macro outlook, one which could eventually take price back to the highs in 2016 at 14899, but the shorter-term may still be a bit sloppy until there is some more separation from the breakout point. The preferred approach on this end is to look for solid-looking consolidation patterns (flags, triangles, rectangles, etc.), along with shallow pullbacks in a sequence of higher-highs and higher-lows (& ideally back to support levels).
As long as price stays above the 2016 trend-line the bullish outlook will remain intact. Resistance clocks in at 13565 (May ‘19 high) and then 13664 (Dec ’18 high). There is a slope running over from May of 2017 that could join forces with the May high to strengthen the 13565-area as resistance, but not a hurdle seen at this time capable of denting the more significant breakout we are seeing.
USD/CAD Daily Chart (sloppy but could clean up)
USD/CAD Weekly Chart (in big-picture breakout area)
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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.