**USD/CAD Weekly Outlook: Analysis and Projections (Source: Action Forex)**
*Original analysis by Action Forex, rewritten and expanded for depth and clarity.*
The USD/CAD currency pair delivered a largely sideways trading pattern last week, maintaining a range just beneath a key technical level. Although there were minor attempts to break through resistance, momentum remained weak and largely constrained by economic data expectations and market risk sentiment. The pair is delicately balanced between support and resistance levels, and traders are keeping a close watch on upcoming macroeconomic catalysts, including key releases from both the U.S. and Canada.
This article provides a comprehensive breakdown of last week’s performance for the USD/CAD pair, technical indicators, fundamental drivers, and our updated forecast for upcoming price action.
## Technical Overview
### Weekly Performance Summary
– The USD/CAD pair mildly rose last week but has not shown strong bullish conviction.
– The pair continues to struggle to break above the 1.3761 resistance level, which aligns with the consolidation highs observed during April and May.
– Daily and weekly indicators have shown a general consolidation tone, with the pair trading in a tight 1.3620–1.3760 range for much of the past two weeks.
### Technical Indicators
**Support Levels:**
– First support is noted at 1.3609 (38.2% Fibonacci retracement of the 1.3176–1.3843 move).
– Deeper support lies at 1.3486—the 61.8% retracement of the same bullish leg.
– Any close below 1.3486 may suggest a shift in medium-term momentum favoring the Canadian dollar.
**Resistance Levels:**
– Immediate resistance is seen at 1.3761.
– A break above 1.3761 may trigger a renewed bullish impulse.
– The next key resistance level is 1.3843 (high posted in April).
**Moving Averages:**
– The 20-day and 50-day moving averages are converging in the 1.3670–1.3700 zone, providing dynamic support and resistance to intraday price movements.
– The 200-day moving average continues to slope upward, suggesting a broader uptrend is still intact unless broken decisively.
**Price Action Outlook:**
– The overall pattern continues to suggest range-bound trading with a slight bullish tilt.
– However, failure to break higher could indicate buyer fatigue and open room for mean reversion.
– RSI (Relative Strength Index) on the daily chart is hovering around the 55–60 zone, reinforcing the neutral to mildly bullish price condition.
## Fundamentals: U.S. vs. Canada
### U.S. Dollar Drivers
**Economic Data:**
– Last week’s U.S. inflation and employment data were mixed. While the Consumer Price Index (CPI) showed signs of cooling, jobless claims ticked higher than expected.
– Markets are increasingly betting on a potential rate cut by the Federal Reserve later this year, though inflation stubbornness continues to delay action.
**Federal Reserve Policy:**
– The Fed has maintained its higher-for-longer rhetoric, pointing to insufficient progress on inflation.
– The dot plot suggests only one cut in 2024, down from the initially projected three earlier this year.
– Comments from FOMC members such as Jerome Powell and Mary Daly indicate the Fed is focused on inflation persistence rather than short-term data volatility.
**Geopolitical and Risk Sentiment:**
– Global uncertainty, including tensions in the Middle East and ongoing U.S.-China trade rhetoric, have pushed investors toward USD as a safe haven.
– Despite this, lower Treasury yields have somewhat capped USD bullishness.
### Canadian Dollar Drivers
**Energy Prices:**
– The Canadian dollar remains tightly correlated with crude oil.
– WTI (West Texas Intermediate) prices have been range-bound between $76 and $82 per barrel, which has provided some support to the loonie but has not
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