Canadian Dollar Price Forecast: USD/CAD Snaps back to Key Support

Earlier in the week USD/CAD caused excitement when the pair ran to a new September high. This threatened a test at the 2021 high of 1.2950, and possibly even a retest of the psychological level of 1.3000.

Canadian Dollar Price Forecast: USD/CAD Snaps back to Key Support

 Prices had pulled back by Monday's midday and had broken through both the lower-lower supports I had previously looked at. We're now at the last support stop that I looked at. It's a huge one, as it's the same price that has been in-play since January.

These prices are 1.2621 and 1.2631. The latter is the 23.6% Fibonacci Retracement of 2020-2021's sell-off, while the former is 50% of the longer-term 2002–2007 major move. These prices form a confluent area that has been extremely active in the last month as support and resistance.

USD/CAD BIGGER PICTURE

The USD/CAD move mirrors the US dollar quite well. A spike in the beginning of the week was quickly dissipated by a faster move around FOMC. However, price action is just that and traders who want to create a strategy around USD/CAD have only a few options.

Range scenarios are still possible due to the push down on support and a show of buyers. We expect a push back towards either 1.2700 or 1.2750.

The bearish side of the pair has potential for breakdown due to the retest of this highly-trafficked support area. Below price action, the 1.2500 psychological level is still of interest. This price marks the September and monthly lows in the pair. A price action swing of 1.2578 could also be used to provide support for the pair before the 1.2500 level is re-evaluated.

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