Canadian Dollar Price Forecast:
- USD/CAD is on the verge of a continuation higher as USD strength and crude oil weakness fuel gains
- A higher-high is an encouraging sign for bulls looking to take aim at overhead resistance
- US Dollar Gains but US Yields, Rate Hike Odds Fall – Market Minutes
Canadian Dollar Price Forecast: USD/CAD Rallies to Resistance as Crude Falls
USD/CAD is on pace for a stellar weekly performance after the pair surged to resistance and its highest level since late April in Tuesday trade. A quick reversal in crude oil prices alongside broader USD strength are just two factors that might have contributed to the pair’s surge, while symptoms of wider risk aversion could look to benefit the greenback further. Either way, recent price action has seen USD/CAD tag a higher-high beyond the peak set in late June and the latest development could open the door to a continuation higher.
USD/CAD Price Chart: Daily Time Frame (March 2020 – July 2021)
That said, bulls may have to overcome a series of technical barriers before the breakout can continue in earnest. First and foremost is the 1.2465 level which coincides with the February 2021 swing low and the recent June high. A quick breach above the area suggests it might give way in the coming days which would see subsequent resistance come into play around the pair’s 200-day moving average near 1.2553. A third zone to keep an eye on resides near 1.2650 which coincides with a series of swing highs from March and April.
USD/CAD Price Chart: 4 – Hour Time Frame (March 2021 – July 2021)
While it seems the pair is tilted to the topside at this point, scheduled event risks are minimal and a continuation higher may be difficult to establish without the proper catalysts. Should price begin to falter as conviction wanes, initial support might be found near the round 1.2400 level with the more important “line in the sand” zone around 1.2300 where a supportive zone resides. As the week progresses and USD/CAD looks to drive higher, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.