Canadian Dollar Forecast: USD/CAD Cracks November Low Ahead of Election

Canadian Dollar Outlook: USD/CAD

USD/CAD cracks the November low (1.3821) ahead of Canada’s federal election on April 28, with the weakness in the exchange rate pushing the Relative Strength Index (RSI) toward oversold territory.

Canadian Dollar Forecast: USD/CAD Cracks November Low Ahead of Election

USD/CAD remains under pressure after registering a fresh yearly low (1.3781) at the start of the week, and a move below 30 in the RSI is likely to be accompanied by a further decline in the exchange rate like the price action from last year.

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In turn, USD/CAD may continue to give back the advance from the October low (1.3473) as the Bank of Canada (BoC) moves to the sidelines, and it seems as though the central bank is at or nearing the end of its rate-cutting cycle as Governor Tiff Macklem and Co. plan to ‘proceed carefully.’

With that said, the weakness in USD/CAD may persist as it snaps the range bound price action from last week, but the RSI may show the bearish momentum abating should it struggle to push into oversold territory.

USD/CAD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView

• USD/CAD trades near the yearly low (1.3781) after struggling to close back above 1.3850 (50% Fibonacci extension), with a breach below the 1.3700 (38.2% Fibonacci extension) to 1.3710 (78,6% Fibonacci retracement) region opening up 1.3630 (38.2% Fibonacci extension).
• Next area of interest comes in around 1.3520 (23.6% Fibonacci extension), but a close above 1.3850 (50% Fibonacci extension) may push USD/CAD back towards the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone.
• Next area of interest comes in around 1.4110 (50% Fibonacci retracement), with a breach above the 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement) region bringing the monthly high (1.4415) on the radar.

Additional Market Outlooks

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AUD/USD Extends V-Shape Recovery to Push Above February High

USD/JPY Falls Toward 2024 Low to Push RSI into Oversold Zone

Gold Bullish Price Series Keeps RSI in Overbought Territory

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong