CAD – USD/CAD breaks below uptrend line, brewing correction risk

The USD/CAD pair has been rising steadily since the beginning of the month, reaching a high of 1.3869 last Thursday. In May, the USD/CAD pair rose 1.57% overall. The interest rate differential between the US and Canada supports the exchange rate's performance; currently, the US benchmark interest rate remains at 3.50%-3.75%, significantly higher than the Bank of Canada's 2.25%.

The USD/CAD pair peaked near 1.38 last week, temporarily halting its recent upward momentum; as a result, the RSI and Stochastic Oscillator have also declined, raising concerns about a potential pullback. The nearest resistance level is around 1.3870, with the high of 1.3966 reached on March 31 serving as another key level, as the pair experienced a significant pullback after hitting this area. Therefore, a clear break above this level would likely solidify the USD/CAD's upward trend. The next resistance levels are expected to be 1.40 and 1.4140. Nearer support levels to watch are the 50-day moving average at 1.3750 and the 25-day moving average at 1.3710, with the next levels at 1.3610 and 1.3550.

Forecast range:
Resistance: 1.3870 - 1.3966 - 1.4000 - 1.4140
Support: 1.3750 - 1.3700 – 1.3610 – 1.3550

This Week's News Highlights:

May 29
Canada Q1 GDP Annualized QoQ: -0.1%
Canada Q1 GDP MoM: -0.1%
Canada Q1 GDP QoQ: +0.0%

Key Focus:
Monday
Canada May Manufacturing PMI (21:30)

Friday
Canada May Employment Data (20:30)
Canada May PMI (22:00)

Any questions? contact our professional analysis team