Title: USD/CAD Weekly Outlook – Upcoming Risks and Potential Rebound Scenarios
Original Source: ActionForex.com. Credit to the original author for the analysis, found at https://www.actionforex.com/technical-outlook/usdcad-outlook/619404-usd-cad-weekly-outlook-436/
The USD/CAD currency pair concluded the past trading week amid persistent weakness, failing to build upon the prior upside momentum. As investors and traders navigate the ever-changing forex landscape, understanding the underlying technical and fundamental drivers of USD/CAD becomes essential.
This comprehensive weekly outlook dives into recent price action, key technical patterns, macroeconomic drivers, and future expectations for the pair. With oil prices, U.S.–Canada interest rate differentials, and shifting risk sentiment all playing a role, this report evaluates USD/CAD from multiple perspectives to provide actionable insights.
Recent Price Action and Technical Structure
The pair ended the week in a restrained range, signaling that bears remain in moderate control:
– USD/CAD attempted a brief rally but quickly fell back under resistance.
– The pair failed to reclaim the 1.3620 level, which has become a significant short-term barrier.
– Bearish momentum remains dominant below the 55 Day EMA and the notable 1.3673 resistance level.
Price has developed within a descending channel since early May 2024, pressuring the 1.3600 level and eventually dragging lower. Selling pressure appears to dominate for now, but the decline also seems to be losing pace, inviting potential for a rebound in the near term.
Important Technical Levels
Support:
– 1.3593: Immediate support zone from early April.
– 1.3510: Swing low from February, a psychological level and former resistance.
– 1.3400: Strong technical support from January.
Resistance:
– 1.3673: The high from May and key resistance level.
– 1.3720: Longer-term horizontal resistance that halted several advances.
– 1.3785: The March swing high and the top edge of the descending channel.
Technical Indicators
– RSI (Relative Strength Index) is steady in the mid-40s on the daily chart, indicating mild bearish momentum but no clear oversold signal.
– MACD (Moving Average Convergence Divergence) shows bearish divergence as prices trend lower while momentum eases.
– 55-Day EMA is acting as dynamic resistance around 1.3660, capping potential advances for now.
Traders should watch whether price can either stabilize above current levels or break below the 1.3500 handle to spark further volatility.
Short-Term Bias: Neutral to Bearish
The short-term bias remains tilted to the downside, provided USD/CAD cannot decisively break above the 1.3620–1.3673 resistance zone. Further retracement may be on the table, especially toward support levels such as 1.3510 or even lower, around 1.3400.
However, given the slowdown in bearish momentum and potential exhaustion, any trigger from the U.S. dollar side or oil markets could fuel a shift in short-term trajectory.
Medium-to-Long-Term Outlook
Despite the near-term softness, the broader picture for USD/CAD remains mixed. The pair has been largely range-bound in 2024, with a general tendency to oscillate between 1.3400 and 1.3800. Several factors will likely dictate whether the pair transitions into a breakout trend or continues to range:
1. Economic Divergence Between the U.S. and Canada
– U.S. economic data has remained resilient, with GDP growth, labor market strength, and sticky inflation keeping the Federal Reserve in hawkish mode.
– Canada, meanwhile, is showing mixed economic signals, with slowing job growth and softer inflation likely paving the way for looser monetary conditions.
– This divergence tends to widen USD/CAD’s upside risk due to rate differentials.
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