**USD/CAD Weekly Outlook: Mixed Momentum with Key Support and Resistance Levels in Focus**
*Based on analysis originally published by ActionForex*
The USD/CAD currency pair registered a broadly sideways trend last week, trading within a tightening range due to conflicting economic data from both the United States and Canada. The pair’s movement reflected growing market uncertainty surrounding the future trajectory of monetary policy in both countries, alongside shifting global risk sentiment and fluctuations in crude oil prices — a key driver for the Canadian dollar.
Here’s a comprehensive breakdown of the technical and fundamental outlook for USD/CAD, updated with data from additional financial sources.
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### Weekly Review: Choppy Trading in a Defined Range
The USD/CAD pair spent the previous week fluctuating between 1.3600 and 1.3750, struggling to break clearly in either direction. Market participants remained cautious ahead of crucial U.S. economic data, including the Federal Reserve’s preferred inflation gauge, the Core PCE Price Index, while Canadian dollar traders kept an eye on energy markets and speculation around the Bank of Canada’s future rate decisions.
– The pair modestly advanced at the beginning of the week but faced resistance near the 1.3750 level.
– Risk sentiment briefly improved midweek, favoring risk-sensitive currencies like the Canadian dollar, which weakened USD/CAD.
– Towards the week’s close, mixed U.S. data, including weaker durable goods orders offset by higher inflation expectations, led to indecisive price action.
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### Technical Analysis: Consolidation Within a Defined Channel
USD/CAD continues to consolidate under important resistance levels while maintaining overall bullish bias, supported by a sequence of higher lows on the daily and weekly charts. Here’s a more detailed technical breakdown:
#### Short-Term Structure (Daily and 4-Hour Charts)
– The pair is locked within a neutral pattern, oscillating mainly between 1.3600 and 1.3750.
– Moving averages (50-SMA and 100-SMA) on lower time frames are flattening, signaling a lack of strong directional bias in the short term.
– The RSI hovers near the 50-level on daily charts, indicating a balance between buyers and sellers.
– The MACD is slightly negative but not diverging sharply, suggesting further sideways movement before a decisive breakout.
#### Key Support Levels
– 1.3585: This level aligns with the 23.6% Fibonacci retracement of the 1.3176 to 1.3845 advance. A drop below this could suggest broader corrective pressure.
– 1.3500: Psychological support and also near the 100-day simple moving average.
– 1.3400: A significant floor established earlier in 2024, any break here would represent the start of a deeper bearish phase.
#### Key Resistance Levels
– 1.3750: The upper boundary of the recent consolidation and immediate resistance.
– 1.3845: The 2024 high thus far. A breakout could signal renewed bullish momentum toward 1.4000.
– 1.3977: A long-term resistance area dating back to late 2022. Surpassing this could drive prices toward parity zones unseen in recent years.
Overall, the technical bias remains cautiously bullish, but a breakout confirmation above 1.3845 will be necessary to trigger fresh upward moves.
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### Fundamental Drivers: U.S. vs Canadian Monetary Policy Divergence
The fundamental backdrop remains moderately bullish for the U.S. dollar, given the Federal Reserve’s persistent stance on keeping interest rates “higher for longer”, especially after recent stickier-than-expected inflation data. However, the Canadian dollar also finds support from firming oil prices and a relatively strong domestic employment outlook.
#### U.S. Factors Supporting USD
– Core PCE inflation rose in line with expectations at 0.2% month-over-month for May. Although it didn’t surprise on the upside, markets interpreted the data as another
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