Canadian dollar (CAD) outlook and forecasts in the wake of today's sharp decline
- Written by: Gary Howes
-
By Will Peters
[Note: All CAD quotes are taken from the wholesale inter-bank markets. Your bank will seek to affix a spread when passing on a retail rate. However, an independent FX provider will guarantee to undercut your banks offer, thereby delivering more currency. Please learn more here.]
No correction in USDCAD and the sharp advance in the market this morning to the mid 1.10 area attains the short-term bull target we have outlined here recently and keeps the market on track for an ext ended rally to the upper 1.12 area—the measured move target from the mid-January bull triangle consolidation. Bull trend momentum remains aligned across a range of time frames which limits the CAD’s powers of recovery significantly at this point—perhaps no more than the high 1.09/ low 1.10 area.
USDCAD’s pick up from the top of the daily bull channel (resistance-turned-support) t hat guided the market higher though late 2013 suggests that the rally in funds may be poised to accelerate again. Note that the short-term target outlined above coincides with medium-term pressure for a push to the low 1.12 area (1.1236 is the 50% retracement of the 2009/2011 move down). Modest dips, such as they may be, remain a buy. 
EURCAD held support at 1.4800/05 earlier this week and is threatening to push through 1.50 today as the CAD slides broadly. The minor consolidation in spot through mid-January above medium-term resistance in the low 1.48 area looks to have set the cross up perfectly for the extension higher to 1.5450 — the next significant medium-term retracement point. Trend momentum is bullish, weakness should be limited to the 1.49 area from here. 
Huge swings in the AUDCAD cross in the past three weeks makes this one a very tough call. The rejection of the 200-day MA last week was liable to lead to renewed weakness, we had thought. Bu the AUD found support around the cluster of medium-term moving average signals in the 0.96 zone late last week and early this week and today’s surge higher ion the AUD has re-crossed the 200-day moving average for the third time in as many weeks. On the face of it, further AUD gains towards 1.00 are back on the cards but our conviction levels here are dropping rapidly. 
GBPCAD is off the leash; the market has been bumping up against minor resistance in the 1.8050 area over the past week but the surge in the GBP today should signal the start of the next leg up in this market. The GBP rally looked to be stalling
late last year but gave back very little ground.
The consolidation between 1.8050/1.7830 over the past week or so looks like a small bull wedge pattern but the implications are for a 700 tick rally from the 1.8050 level, possibly very quickly. Note that 1.8171 is the 38.2% retracement of the huge GBP depreciation (2.35/1.48) seen between 2007/2010. A weekly close above targets 1.9201 (50% retracement point).
The outlook for the Canadian dollar (CAD) is resolutely poor at present with most major currencies managing to take a large chunk out of the CAD. But what does the Canadian dollar forecast look like?
To answer our question regarding the Canadian dollars technical forecasts we hear from TD Securities analyst Shaun Osborne:[Note: All CAD quotes are taken from the wholesale inter-bank markets. Your bank will seek to affix a spread when passing on a retail rate. However, an independent FX provider will guarantee to undercut your banks offer, thereby delivering more currency. Please learn more here.]
US dollar vs Canadian dollar outlook and forecast
No correction in USDCAD and the sharp advance in the market this morning to the mid 1.10 area attains the short-term bull target we have outlined here recently and keeps the market on track for an ext ended rally to the upper 1.12 area—the measured move target from the mid-January bull triangle consolidation. Bull trend momentum remains aligned across a range of time frames which limits the CAD’s powers of recovery significantly at this point—perhaps no more than the high 1.09/ low 1.10 area.
USDCAD’s pick up from the top of the daily bull channel (resistance-turned-support) t hat guided the market higher though late 2013 suggests that the rally in funds may be poised to accelerate again. Note that the short-term target outlined above coincides with medium-term pressure for a push to the low 1.12 area (1.1236 is the 50% retracement of the 2009/2011 move down). Modest dips, such as they may be, remain a buy.
Euro to Canadian dollar exchange rate forecast
EURCAD held support at 1.4800/05 earlier this week and is threatening to push through 1.50 today as the CAD slides broadly. The minor consolidation in spot through mid-January above medium-term resistance in the low 1.48 area looks to have set the cross up perfectly for the extension higher to 1.5450 — the next significant medium-term retracement point. Trend momentum is bullish, weakness should be limited to the 1.49 area from here.Australian dollar to Canadian dollar forecast
Huge swings in the AUDCAD cross in the past three weeks makes this one a very tough call. The rejection of the 200-day MA last week was liable to lead to renewed weakness, we had thought. Bu the AUD found support around the cluster of medium-term moving average signals in the 0.96 zone late last week and early this week and today’s surge higher ion the AUD has re-crossed the 200-day moving average for the third time in as many weeks. On the face of it, further AUD gains towards 1.00 are back on the cards but our conviction levels here are dropping rapidly.Pound sterling to Canadian dollar forecast
GBPCAD is off the leash; the market has been bumping up against minor resistance in the 1.8050 area over the past week but the surge in the GBP today should signal the start of the next leg up in this market. The GBP rally looked to be stalling
late last year but gave back very little ground. The consolidation between 1.8050/1.7830 over the past week or so looks like a small bull wedge pattern but the implications are for a 700 tick rally from the 1.8050 level, possibly very quickly. Note that 1.8171 is the 38.2% retracement of the huge GBP depreciation (2.35/1.48) seen between 2007/2010. A weekly close above targets 1.9201 (50% retracement point).
