Title: In-Depth Weekly Technical Outlook for USD/CAD: Navigating Key Levels and Market Influences
Original Author: ActionForex.com Analysts
Expanded by: [Your Name or Organization]
The USD/CAD currency pair came under notable pressure over the previous week, closing at 1.3623, down from the recent high of 1.3774. While this downward movement has triggered increasing interest among traders, particularly in light of recent macroeconomic developments within both the United States and Canada, the long-term direction of the pair remains uncertain. This article expands upon the original analysis provided by ActionForex and incorporates insights from additional authoritative sources to provide a deeper dive into the current USD/CAD weekly outlook and what traders may expect going forward.
Overview of Recent Price Action
– USD/CAD experienced a corrective pullback from last week’s high at 1.3774, falling to close at 1.3623.
– The rejection occurred just shy of the previous intermediate resistance zone carved out during mid-March 2024.
– Despite the dip, the pair remains above several technical supports, preserving the broader bullish bias unless key levels are breached.
Technical Analysis: Structure and Implications
Broad Technical Picture
– On the daily and weekly timeframes, USD/CAD has been locked within a large consolidation range since April 2023.
– The upper boundary of the range hovers near 1.3860, while the lower support lies around 1.3180.
– As long as the price remains within this channel, movements are considered corrective rather than trend-defining.
Key Resistance Levels
– 1.3666: Immediate resistance as per the 61.8% Fibonacci retracement of the drop from 1.3833 to 1.3181.
– 1.3774: The high posted last week, challenging the March peak of 1.3860.
– 1.3860: A decisive break here could signal a bullish continuation toward the 1.39–1.41 zone, potentially testing the 2020 and 2022 highs.
Critical Support Levels
– 1.3580: Short-term support where minor consolidation formed earlier this month.
– 1.3486: Next key level, which coincides with the 200-day EMA and the 38.2% Fibonacci retracement from 1.3181 to 1.3774.
– 1.3370: The lower boundary of April’s upward channel, a breach of which could trigger a bearish reversal.
– 1.3180: Long-term horizontal support defining the bottom of the year-long range.
Indicators and Oscillators
– RSI (Relative Strength Index) on the weekly chart is neutral to bullish, still holding above the 50 mark but pointing downward.
– Daily MACD is beginning to flatten out, suggesting diminishing bullish momentum.
– Moving Averages: The 50-day EMA sits comfortably above the 200-day EMA, continuing to offer supportive structure for bulls in the medium term.
Fundamental Drivers Impacting the Pair
U.S. Economic Highlights
– Fed Policy: While the Federal Reserve is broadly maintaining its higher-for-longer stance, recent inflation and employment data have introduced caution.
– CPI, PPI, and Retail Sales for May beat expectations, demonstrating economic resilience.
– Fed Chair Jerome Powell emphasized data-dependency at the June FOMC meeting, forecasting just one rate cut for 2024 as per the updated dot plot.
Canadian Economic Developments
– Bank of Canada (BoC) became the first G7 central bank to initiate rate cuts in June 2024, trimming their key overnight rate by 25 basis points to 4.75%.
– Canadian inflation moderated to 2.7% in April, approaching the BoC’s 2% target faster than anticipated.
– March and April GDP figures showed stagnation, signaling vulnerability in Canada’s economic growth.
Interest Rate Differential Outlook
Read more on USD/CAD trading.