**USD/CAD Weekly Outlook: Moderate Consolidation but Bullish Bias Remains**
Originally published by ActionForex.com
The USD/CAD pair has demonstrated notable resilience recently despite its consolidative behavior. During the past week, the pair extended its upward trajectory, peaking at 1.3793, but momentum failed to sustain beyond that level. Pressure mounted near-term as a minor pullback was observed; however, technical analysis suggests the bullish trend is still intact unless deeper levels are breached.
In this weekly outlook, we delve deeply into the technical structure, macroeconomic context, Canadian and U.S. economic landscapes, and potential forecast scenarios that could guide USD/CAD over the coming weeks.
## Price Movement and Technical Structure
USD/CAD is maintaining position within a robust long-term uptrend channel. The weekly close around the 1.3640 level suggests minor weakness post a local high, but the broader structure continues to support further upward momentum.
– Last week’s high: 1.3793
– Weekly close: approximately 1.3640
– Immediate support: 1.3520
– Medium-term resistance: 1.3860 (Year-to-date high)
– Key support to break trend: 1.3299
**Short-Term View: Holding Patterns with Mild Downside Adjustment**
On intraday charts, USD/CAD showed signs of exhaustion near 1.3793. MACD momentum slowed, indicating an absence of bullish follow-through. The 4-hour chart shows a bearish divergence, and the pair retraced a fraction of its recent gains.
– RSI (Relative Strength Index) dropped from overbought territory
– Short-term minor support seen around 1.3600
– Price action is contained within a medium-term ascending channel
**Medium-Term View: Bullish While Above 1.3299**
Despite short-term retracements, the medium-term bullish outlook persists. USD/CAD is continuing to post higher lows and higher highs on the daily and weekly charts. As long as the pair holds above 1.3299 (support from February 2 swing low), it is likely to resume an upward breakout beyond 1.3860, the 61.8% projection of the pattern from the October 2023 swing low.
### Elliott Wave & Fibonacci Perspective
From an Elliott Wave perspective, the pair appears to be in wave 3 or a wave C upward cycle. Using the Fibonacci extension technique:
– 61.8% extension from 1.2400 (Oct 2023 low) to 1.3860 (projected target): 1.4200
– 100% fib projection aligning near 1.4679, signaling potential upper bounds over the next several months
Continued rejection or a break above the 1.3860 level would reaffirm strength and open doors for a run toward these levels.
## Macro Drivers Affecting USD/CAD
### U.S. Dollar Strength
The U.S. dollar has found strong ground due to expectations that the Federal Reserve will delay interest rate cuts. FOMC officials have conveyed a cautious approach, with ongoing concern about sticky inflation and tight labor market conditions. This supports the USD across the board.
Key Influences:
– Hawkish tone from Federal Reserve Officials
– Improving US ISM services and manufacturing PMIs
– Core PCE inflation holding near 2.8%, well above the target
– Ten-year U.S. Treasury yields near multi-month highs
### Canadian Dollar Under Pressure
Conversely, the Canadian dollar has come under renewed pressure. Canada’s economic data has been weaker than anticipated. The Bank of Canada (BoC), although initially aligning closely with the Fed, has started to diverge.
Notable Factors:
– GDP in Canada has shown sluggish growth, with Q1 2024 posting only a 1.0% gain vs. 1.7% expected
– Labor market is cooling:
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