**USD/CAD Weekly Outlook: June 3-7, 2024**
*Original analysis credited to ActionForex.com*
The USD/CAD currency pair faced a crucial inflection point as trading moved into the first week of June 2024, marked by mixed macroeconomic signals, a lagging Canadian economy, shifts in oil prices, and a firming U.S. dollar. The pair underwent moderate losses but generally held within its medium-term ascending trend channel. The week’s movement suggested short-term bearish momentum, but the broader technical structure still shows potential for upward continuation, provided key support levels hold.
This in-depth weekly forecast outlines the technical setup, macroeconomic drivers, and probable scenarios for the USD/CAD pair, aiming to help traders make informed decisions based on both technical analysis and broader fundamental trends.
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### 1. Summary of Weekly Price Action
– USD/CAD saw a bearish pullback during the week ending May 31, 2024.
– The pair closed near 1.3625, after failing to sustain gains above the key zone of 1.3700.
– Despite bearish intra-week movement, the pair remains above its long-term channel support and the 55-day EMA.
– Price action forms lower intraday highs, hinting at waning near-term bullish momentum.
– Weekly RSI is turning sideways from previous bullish trajectory, indicating consolidation or deeper pullback.
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### 2. Technical Outlook
The recent decline in USD/CAD encounters critical technical support levels. Whether bulls regain control or bears deepen the correction will depend on sustained reactions to these levels.
#### Short-Term Support and Resistance Levels:
– **Immediate Support**: 1.3580 (low from the previous week; base for short-term correction)
– **Secondary Support**: 1.3455 (near the 50% Fibonacci retracement of 1.3177 to 1.3845)
– **Key Resistance**: 1.3705 (recent high)
– **Breakout Resistance**: 1.3845 (April high, multi-month peak)
#### Indicators to Watch:
– **RSI (Relative Strength Index)**: On daily and 4-hour charts, RSI has retreated from overbought conditions, suggesting short-term consolidation. Weekly RSI remains positive though marginally lower.
– **MACD (Moving Average Convergence Divergence)**: On the daily chart, MACD shows convergence, hinting at a potential crossover that may support downward continuation.
– **50 and 200-Day EMAs**: The pair remains trading above these moving averages, maintaining bullish medium-term bias.
#### Trendline and Channel Insights:
– USD/CAD continues to respect the upward-sloping trendline from the low of 1.3177 in October 2023.
– Price is trading within a rising parallel channel with multiple support bounces.
– A weekly close below this channel could indicate a trend change.
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### 3. Fundamental Factors Driving the Market
The current USD/CAD setup is being shaped by multiple macroeconomic and geopolitical developments, influencing both the Canadian dollar and the U.S. dollar.
#### U.S. Dollar Drivers:
– **Sticky Inflation**: The May PCE Price Index released last week showed persistent inflation pressures, strengthening the U.S. dollar.
– **FOMC Rate Expectations**: Though markets anticipate rate cuts later in 2024, comments from Federal Reserve officials remain hawkish, hinting at higher rates for longer.
– **Employment Report Ahead**: Traders are closely watching the upcoming Non-Farm Payrolls (NFP) report on June 7. Strong jobs data could reignite dollar strength.
#### Canadian Dollar Weakness:
– **Soft GDP Growth**: Canada’s Q1 2024 GDP printed at just 1.7% (annualized), much lower than the BoC forecast of 2.8%. This increases the likelihood of rate cuts.
– **BoC Dovish Signals
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