CAD : Support
(Tue, 2 Mar 2021). The Canadian Dollar rally seemingly lost steam against the US Dollar last week with USD/CAD rebounding sharply off key technical support into the close of February trade. The rally covered nearly 70% of the year-to-date range in just two days with the reversal threatening a larger recovery in the weeks ahead.
CANADIAN DOLLAR PRICE CHART – USD/CAD WEEKLY
Notes: In last month’s Canadian Dollar Weekly Price Outlook we noted that the USD/CAD was trading, “just above key technical support at 1.2579-1.2619,” – a region defined by the 2018 yearly open and the 78.6% Fibonacci retracement of 2017 advance. An intra-week drop registered a low at 1.2468 / channel support before rebounding sharply, nearly posting an outside-week reversal to close back above this key support zone. Is a low in place?
Initial weekly resistance stands at the median-line (currently ~1.2770s) backed by the yearly opening-range high at 1.2881. Ultimately a breach / weekly close above the 2020 yearly open at 1.2975 would be needed to suggest a more significant trend reversal is underway- look for a larger price inflection there IF reached. A close below 1.2579 is still needed to mark resumption of the broader downtrend with subsequent support objectives unchanged at the 2018 low-week close at 1.2421 and the 88.6% retracement at 1.2385.
Bottom line: The Canadian Dollar has failed a break below a critical support confluence we’ve been tracking for months now and leaves the bears vulnerable while above. From a trading standpoint, look for downside exhaustion ahead of 1.2579 IF price is indeed heading higher with a breach above the median-line needed to keep the focus on broader downtrend resistance. Stay nimble as we head into the March opening-range.
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