Canadian Dollar Forcast: USDCAD Bounce from Key Zone

The USD/CAD is one of the most consistent sell-offs that accompany the recent theme of weakening of the U.S. dollar. After peaking in March last year, the US dollar/Canadian dollar and the US dollar are in different liquidation stages for the next fourteen months. Although the US dollar has weakened across the board, the Canadian dollar has strengthened with the help of rising oil prices. For most of this period, the US dollar/Canadian dollar has remained below the downward trend line. The Bank of Canada began to talk about the post-pandemic policy outlook when its arm. The Fed has not yet done so. This deviation has created more momentum for the US dollar shorts. The US dollar/Canadian dollar fell to a six-year low, but it was near that low on the chart that things began to change. , I emphasized this problem at the end of May, because the currency pair started to get into trouble after failing to break through the 1.2000 psychological control.

USD/CAD Daily Price Chart

USDCAD Daily Price Chart

Chart by James Stanley; USDCAD on Tradingview

Before the Bank of Canada’s interest rate decision in early June, the USD/CAD price had begun to show a range trend, and the USD/CAD showed an oversold level not seen in more than a decade. When the Bank of Canada’s performance was slightly lower than in April’s enthusiasm, the currency pair started to rise and the Canadian dollar weakened slightly; this led to the FOMC interest rate decision. At this time, the strong U.S. dollar combined with the weakening of the Canadian dollar resulted in a strong currency pair Rebound. After the FOMC interest rate was decided, I began to look for possible settings for continued long USD/CAD, in case this correction turns into something else. I emphasized a higher and lower potential support area from around the 1.2250 psychological level. The zone started to work last week and the price of 1.2250 helped make a low on Wednesday. Since then, buyers have been pushing more, creating a short-term high, as of this morning, the low of the secondary support area seen in the same article.

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart by James Stanley; USDCAD on Tradingview

USD/CAD Strategy Near-Term

At this point, the US dollar/Canadian dollar has a certain appeal to the long US dollar strategy. Above it is the 1.2500 level, followed by the Fibonacci level of 1.2622. This is a large area, and it took a little more than three months for the USD/CAD to break below, so if this area works, it may cause average reversals and round-trip price movements until it is broken. Illuminate a more prominent impeller. At this point, the best guess is the Jackson Hole Economic Symposium to be held later this summer. At the bottom of the current price trend, short-term support is currently displayed in the 1.2352-1.2361 area, and below it is the 1.2250-1.2300 area. If buyers cannot hold the 1.2250 low, those bullish forecasts may soon be questioned.

USD/CAD Eight Hour Price Chart

USDCAD Eight Hour Price Chart

Chart by James Stanley; USDCAD on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX