Title: Comprehensive Weekly Technical Outlook for USD/CAD – June 10, 2024
Source: Adapted and expanded from an article originally by ActionForex.com – “USD/CAD Weekly Outlook”
The USD/CAD currency pair concluded the previous trading week with a modest recovery, indicating a slight upward bias in the near term. However, despite this rebound, the broader technical picture leaves room for caution as momentum remains limited. This article explores the updated technical landscape of the USD/CAD pair, draws from various market perspectives, extends the analysis with additional context, and lays out possible scenarios for the coming weeks.
Overview of Current Price Action
– USD/CAD showed a mild rebound from 1.3604 during the week ending June 7, 2024.
– The pair reached a high of 1.3751 but failed to decisively break above key resistance levels.
– Price movement appears to be consolidating after a recent downward correction from May’s high around the 1.3845 mark.
The primary trend since late April has remained sideways, with the pair bounded within relatively narrow trading bands. This range-bound activity suggests uncertainty among traders about the broader direction of the U.S. dollar and Canadian dollar pair.
Short-Term Technical Analysis
Looking at daily and weekly charts, several indicators provide clues about the potential short-term direction for USD/CAD.
1. Support and Resistance Levels
– Immediate support: 1.3604 (last week’s low).
– Near-term resistance: 1.3784 (aligns with the 38.2% Fibonacci retracement of the March-May rally).
– Stronger resistance: 1.3846 (May swing high and psychological level).
– Key support levels beyond 1.3604 include 1.3517 and the pivotal 1.3378 area.
2. Moving Averages
– The 50-day simple moving average (SMA) is converging around 1.3700, acting as initial resistance.
– The 200-day SMA is stronger and resides near the 1.3550 mark, aligning with possible downside targets.
– A cross of the 50SMA below the 200SMA (known as a death cross) would be bearish, but no such signal has emerged yet.
3. MACD (Moving Average Convergence Divergence)
– The MACD lines are currently flat on both daily and weekly charts, reflecting consolidation.
– The lack of momentum either way implies the market is waiting for a catalyst to trigger a clearer breakout.
4. RSI (Relative Strength Index)
– The RSI on the daily chart remains neutral around the 50-mark.
– There is no indication of overbought or oversold conditions, reinforcing the consolidation narrative.
Medium-Term Technical Outlook
In the medium term, the bias remains cautiously bullish unless the key support at 1.3367 is decisively broken.
– Price movement has maintained a series of higher lows, pointing to lingering upward momentum.
– A break above 1.3845 would confirm resumed bullishness, possibly leading to a retest of the 1.3977 resistance set in early March.
– Conversely, a failure to hold above 1.3367 could trigger a deeper retracement toward 1.3200 or even 1.3115, which is a significant historical support area.
Fundamental Factors Impacting USD/CAD
While technical analysis provides insight into price patterns, fundamental developments are key drivers of direction for USD/CAD.
1. U.S. Dollar Factors
– The Federal Reserve has maintained a hawkish tone, with Chair Jerome Powell recently reinforcing the need to see sustained decreases in inflation before considering rate cuts.
– Upcoming U.S. CPI and PPI data will be critical in determining short-term rate policy.
– A stronger-than-expected inflation print could send the USD higher, strengthening USD/CAD.
2. Canadian
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