US Dollar Forecast: USD/CAD on Cusp of Testing 2022 High
USD/CAD is on the cusp of testing the 2022 high (1.3978) as it pushes above the opening range for November.
Written by
David Song
Strategist
US Dollar Outlook: USD/CAD
USD/CAD is on the cusp of testing the 2022 high (1.3978) as it pushes above the opening range for November, but lack of momentum to extend the recent series of higher highs and lows may keep the Relative Strength Index (RSI) out of overbought territory.
US Dollar Forecast: USD/CAD on Cusp of Testing 2022 High
Unlike the price action from October, the RSI holds below 70 even as USD/CAD registers a fresh yearly high (1.3968), and the oscillator may show the bullish momentum abating as it appears to be diverging with price.
As a result, USD/CAD may struggle to retain the advance from the start of the week, but the update to the US Consumer Price Index (CPI) may keep the exchange rate afloat as the report is anticipated to show persistent inflation.
US Economic Calendar
The headline CPI is expected to increase to 2.6% in October from 2.4% per annum the month prior, while the core rate of inflation is anticipated to hold steady at 3.3% during the same period.
In turn, signs of sticky price growth may put pressure on the Federal Reserve to unwind its restrictive policy at a slower place, and the update may generate a bullish reaction in the US Dollar as it undermines speculation for another rate-cut at the Fed’s last meeting for 2024.
With that said, USD/CAD may attempt to test the 2022 high (1.3978) as it stages a three-day rally, but a softer-than-expected CPI report may curb the recent advance in the exchange rate as it fuels expectations for lower US interest rates.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- USD/CAD extends the advance from the start of the week to register a fresh yearly high (1.3968), with a break/close above the 1.3970 (61.8% Fibonacci extension) to 1.4000 (61.8% Fibonacci extension) region opening up the 1.4040 (23.6% Fibonacci retracement) to 1.4080 (78.6% Fibonacci extension) zone.
- Next area of interest comes in around the May 2022 high (1.4173) but USD/CAD may struggle to extend the recent series of higher highs and lows should it fail to push above the 2022 high (1.3978).
- Lack of momentum to hold above 1.3900 (50% Fibonacci extension0 may push USD/CAD back towards the 1.3810 (161.8% Fibonacci extension) to 1.3850 (50% Fibonacci extension) zone, with the next region of interest coming in around 1.3700 (38.2% Fibonacci extension).
Additional Market Outlooks
US Consumer Price Index (CPI) Preview (OCT 2024)
GBP/USD Outlook Hinges on Break of Monthly Opening Range
US Dollar Forecast: USD/JPY Defends Post-US Election Rally
US Dollar Forecast: EUR/USD Opening Range in Focus Ahead of US CPI
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Latest market news
Web Trader platform
Our sophisticated web-based platform is packed with features.
Open an account today
Experience award-winning platforms with fast and secure execution.
Economic calendar
Related articles
Euro Short-term Outlook: EUR/USD Pullback Nears Pivotal Uptrend Support 8 28 2026
Warsh's comments accelerated the EUR/USD selloff, raising the stakes as buyers look to stabilize the broader recovery.
Gold and S&P 500 analysis: What now after Warsh’s hawkish speech?
The dollar surged across the board after the Fed Chair Kevin Warsh surprised with a hawkish-leaning speech at the Jackson Hole summit. All the bearish dollar bets that had been accumulated since last Friday on the back of data weakness and bond market troubles had to be squared and that triggered a short squeeze rally for the dollar. Gold and silver dropped, as a result, as too did bitcoin, while US indices were giving back earlier gains.
EUR/USD forecast: All eyes on Warsh at Jackson Hole - Forex Friday
For much of this week, the EUR/USD has been edging lower with the US dollar regaining some ground after last week’s sell-off that was triggered, in part, by the bond market worries. Investors have been unwilling to bet further against the US dollar so far this week ahead of Kevin Warsh’s keynote speech at the Jackson Hole summit, due later today.