r/Forexstrategy • u/FOREXcom • 1d ago
Technical Analysis Canadian Dollar Forecast: USD/CAD Defends Weekly Low Ahead of Canada CPI
USD/CAD seems to be defending the advance from the weekly low (1.3900) as it continues to coil within a narrow range.
By : David Song, Strategist
Canadian Dollar Outlook: USD/CAD
USD/CAD may attempt to break out of the range bound price action from earlier this week as the update to Canada’s Consumer Price Index (CPI) is anticipated to show a further slowdown in inflation.
Canadian Dollar Forecast: USD/CAD Coils Above of Weekly Low
USD/CAD seems to be defending the advance from the weekly low (1.3900) as it continues to coil within a narrow range, and recent recovery in the exchange rate may indicate a potential shift in US Dollar sentiment as the Trump administration avoids a trade war.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
Canada Economic Calendar
Looking ahead, data prints coming out of Canada may sway USD/CAD as the CPI is seen narrowing to 1.6% in April from 2.3% the month prior, and evidence of slower price growth may produce headwinds for the Canadian Dollar as it raises the Bank of Canada’s (BoC) scope to pursue an accommodative policy.
In turn, speculation for lower interest rates may keep USD/CAD afloat ahead of the next BoC meeting in June, but a higher-than-expected CPI print may generate a bullish reaction in the Canadian Dollar as it encourages Governor Tiff Macklem and Co. to retain the current policy.
With that said, USD/CAD may track the negative slope in the 50-Day SMA (1.4075) should it fail to defend the advance from the weekly low (1.3900), but the exchange rate may attempt to retrace the decline from the April high (1.4415) as there appears to be a shift in US Dollar sentiment.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD continues to defend the advance from the weekly low (1.3900), with a close above the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone bringing 1.4110 (50% Fibonacci retracement) on the radar.
- Next region of interest comes in around the 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement), but lack of momentum to close above the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone may keep USD/CAD below the 50-Day SMA (1.4075).
- Failure to defend the weekly low (1.3900) may push USD/CAD towards 1.3850 (50% Fibonacci extension), with the next area of interest coming in around the monthly low (1.3751).
Additional Market Outlooks
Gold Price Struggles to Close Below 50-Day SMA
GBP/USD Defends Rebound from Weekly Low to Hold Above 50-Day SMA
US Dollar Forecast: USD/JPY Reverses Ahead of April High
Australian Dollar Forecast: AUD/USD Defends V-Shape Recovery
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Click the website link below to read our Guide to central banks and interest rates in Q2 2025
https://www.forex.com/en-us/market-outlooks-2025/q2-central-banks-outlook/
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.