Canadian Dollar Forecast: USD/CAD Four-Week Rally Eyes Yearly Highs

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• USD/CAD has rallied more than 3.5% from the August low and is poised for a fourth consecutive weekly advance.
• The pair has advanced in 14 of the past 15 sessions with the bulls approaching resistance at the yearly highs
• Weekly momentum is nearing its strongest levels since early July, while an overbought daily RSI warns that the advance is becoming increasingly stretched.
• The broader technical structure remains constructive, but buyers still need a confirmed breakout above the yearly highs to fuel the next major leg of the rally.
• Key event risk into the October open with U.S. Non-Farm Payrolls on tap Friday
• Resistance 1.4239/48 (key), 1.4292, 1.4375– Support 1.4140, 1.40 (key), 1.3944

USD/CAD enters the October trade with bulls firmly in control after a powerful September advance materially strengthened the near-term technical picture. The latest push is now approaching an important inflection zone, while increasingly stretched momentum warns against chasing the move at current levels. With softer inflation shifting Fed expectations toward a potential hold next month, Friday’s Non-Farm Payrolls report could prove critical in shaping the next phase of the advance. Battle lines drawn on the USD/CAD weekly technical chart.

Canadian Dollar Price Chart – USD/CAD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In last month’s Canadian Dollar Technical Forecast we noted that USD/CAD had rebounded off pivotal support with the rally, “approaching initial resistance into the close of August. From a trading standpoint, losses would need to be limited to 1.3844 IF price is heading higher on this stretch with a close above 1.3955 needed to fuel the next major leg of the advance.” USD/CAD has now rallied more than 3.5% from the August lows with the bulls attempting to clear the median-line of the 2026 pitchfork today. Weekly momentum is approaching the highest levels since early July when the yearly high was registered with daily RSI deep in overbought territory.

The bulls are in control for now, but major resistance is eyed just higher at the 2025 March lows and the 2026 swing high at 1.4239/48. The focus is on a reaction off this mark IF reached with a breach / weekly close above needed to fuel the next major leg of the advance. Subsequent resistance objectives are eyed at the 61.8% retracement of the 2025 decline and the 2025 high-week close (HWC) at 1.4292, and the 2025 March HWC at 1.4375. Note that this level converges on the 75% parallel mid-month and represents an area of interest for possible exhaustion / price inflection IF reached.

Initial weekly support rests with the November swing high near 1.4140 and is backed by the 1.41-handle. The 25% parallel converges on this level over the next few weeks and losses below this slope would be needed to suggest a more significant high is in place and a larger reversal is underway. Subsequent support rests with the April HWC at 1.3944 and the 52-week moving average, currently near 1.3880.

 

Bottom line: USD/CAD is poised to mark a fourth consecutive weekly advance with price rallying 14 of the past 15 days. From a trading standpoint, look to reduce portions of long-exposure on a stretch towards 1.4240- losses would need to be limited to 1.4140 IF price is heading for a breakout here with a weekly close above the yearly high needed to fuel the next leg of the rally.

Event risk intensifies into the close of the week, with the highly anticipated U.S. Non-Farm Payrolls report on tap Friday. Expectations for an October hike have diminished considerably following today’s softer-than-expected PCE inflation print—the Federal Reserve’s preferred gauge—with markets now pricing more than a 60% probability of a hold next month. Rate-hike expectations have largely shifted toward December, where markets are assigning nearly 90% odds to at least one 25-basis-point increase before year-end. A firm employment report could revive the October hike outlook and underpin USD/CAD, while a softer release would reinforce expectations for a near-term hold and leave the pair vulnerable into the weekly close. Stay nimble into the monthly cross and watch the weekly close for directional guidance. Review my latest Canadian Dollar Short-term Outlook for a closer look at the near-term USD/CAD technical trade levels.

US / Canada Economic Data Release

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex