Canadian Dollar Forecast: USD/CAD Bounces Back Ahead of Monthly Low
USD/CAD bounces back ahead of the monthly low (1.3751) to halt the selloff from earlier this week.
Written by
David Song
Strategist
Canadian Dollar Outlook: USD/CAD
USD/CAD bounces back ahead of the monthly low (1.3751) to halt the selloff from earlier this week, but the exchange rate may track the negative slope in the 50-Day SMA (1.4033) as it holds below the moving average.
Canadian Dollar Forecast: USD/CAD Bounces Back Ahead of Monthly Low
USD/CAD struggles to extend the recent series of lower highs and lows as the US House of Representatives passes the ‘big, beautiful bill’ with a 215-214 vote, and the shift in US fiscal policy may continue to sway the exchange rate as the Bank of Canada (BoC) warns that ‘short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions.’
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In turn, the BoC may stick to the sidelines as its next meeting on June 4 as Canada’s Consumer Price Index (CPI) proved to be higher-than-expected in April, and the rebound USD/CAD may turn out to be temporary as the central bank seems to be at or nearing the end of its rate-cutting cycle.
With that said, USD/CAD may continue to give back the advance from the monthly low (1.3751) should it track the negative slope in the 50-Day SMA (1.4033), but the exchange rate may consolidate over the remainder of the week as it no longer carves a bearish price series.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD seems to be defending the rebound from the weekly low (1.3814) as it no longer carves a series of lower highs and lows, and lack of momentum to close below 1.3850 (50% Fibonacci extension) may push the exchange rate back toward the monthly high (1.4017).
- Need a close above the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone to bring 1.4110 (50% Fibonacci retracement) on the radar, with the next area of interest coming in around 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement).
- At the same time, a close below 1.3850 (50% Fibonacci extension) may push USD/CAD toward the monthly low (1.3751), with a break/close below the 1.3700 (38.2% Fibonacci extension) to 1.3710 (78.6% Fibonacci retracement) region opening up 1.3630 (38.2% Fibonacci extension).
Additional Market Outlooks
US Dollar Forecast: USD/CHF Falls Toward Monthly Low
GBP/USD Rallies to Fresh Yearly High as UK CPI Shoots Higher
US Dollar Forecast: EUR/USD Bounces Back Ahead of Monthly Low
USD/JPY Decline Persists amid US Credit Rating Downgrade
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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