USD/CAD Forecast July 24-28

The Canadian dollar rally continued last week, as USD/CAD dropped close to 100 points. The pair closed at 1.2535, its lowest weekly close since June 2015. This week’s key event is GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The Canadian dollar shrugged off weak inflation numbers, as CPI declined 0.1%, its first decline of the year. In the US, political concerns continues to rise, as Trump’s failure to pass a healthcare bill triggered a fresh wave of US dollar selling. Investors remain skeptical about Trump’s ability to have its agenda passed in Congress. Special Counsel Mueller is expanding his investigation into Trump’s business dealings could be bad news for Trump and is weighing on the US dollar.

Updates:

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

1. Wholesale Sales: Monday, 12:30. The indicator edged up to 1.0% in April, easily beating the estimate of 0.5%. This marked a 4-month high. The forecast for the May report stands at 0.5%.
2. GDP: Friday, 12:30. GDP is released each month. In April, GDP slowed to 0.2%, matching the estimate. This was the weakest gain since February. Another gain of 0.2% is expected in May.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2642 and quickly climbed to a high of 1.2701, as resistance held at 1.2710 (discussed last week). It was all downhill from there, as the pair dropped to a low of 1.2518. USD/CAD closed the week at 1.2535.

Technical lines, from top to bottom

We start with resistance at 1.2980.

1.2823 is the next resistance line.

1.2710 has some breathing room in resistance after USD/CAD posted losses.

1.2563 is a weak resistance line.

1.2457 is providing support.

1.2351 has been a cushion since May 2015.

1.2218 is next.

1.2126 is the final support line.

I am bearish on USD/CAD

The US dollar is under pressure, with mixed numbers in Q2 and worries that the Fed might not raise rates in December. The Canadian dollar is on a roll, and investor sentiment is strong following a rate increase from the BoC.