USD/CAD Price Outlook: Canadian Dollar On The Edge Ahead Of BOC

The Canadian Dollar has plummeted more than 1.4% month-to-date against the greenback with USD/CAD trading just below confluence resistance ahead of the Bank of Canada interest rate decision tomorrow. Here are the updated targets and invalidation levels that matter on the USD/CAD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD DAILY PRICE CHART

Technical Outlook: 

In our latest USD/CAD Weekly Technical Outlook, we highlighted a, “critical resistance barrier at 1.3130/55- a region defined by the yearly high-week reversal close, the 61.8% retracement of the June decline and parallel resistance (red).” This key level remains in focus heading into tomorrow’s central bank rate decision.

Note that daily RSI has held sub-60 since the yearly highs registered in June- watch this closely into the close of trade tomorrow. A breach in momentum alongside a rally surpassing 1.3155 would be needed to validate the breakout with such a scenario targeting subsequent objectives at 1.3206 and 1.3257.

USD/CAD 240 PRICE CHART

Notes: 

A closer look at price action shows the USD/CAD trading within the confines of an ascending pitchfork formation extending off the monthly lows with the median-line highlighting interim support at 1.3068/80 (weekly opening-range low & 100-day moving average. A break below this level shifts the focus towards the lower parallels, currently ~1.3020 & 1.2980s- look for a bigger reaction there. Broader bullish invalidation rests at 1.2957.

Bottom line: 

“USD/CAD is testing Big resistance here at 1.3130/55 with the immediate long-bias at risk while below.” From a trading standpoint, ‘a good spot wind down long-exposure and raise stops. I’ll be looking for a reaction at this key resistance barrier, initially for a possible exhaustion / fade opportunity- watch the weekly close here for guidance.’