USD/CAD & NZD/CAD Price Outlook:
Canadian Dollar Forecast: USD/CAD Slips, NZD/CAD Threatens Breakdown
The Canadian Dollar has enjoyed gains against both the US and Kiwi Dollars this week, extending recent trends and threatening technical support in the process. Recent losses in USD/CAD have worked to establish a lower-low, slightly beneath the August 5 trough. Consequently, the pair has extended the series of consecutively lower lows and lower highs, a sign bullish intent is largely absent.
USD/CAD Price Chart: Daily Time Frame (January 2020 – August 2020)
With that in mind, there is little to suggest a dramatic shift for USD/CAD that would see the pair suddenly buck the trend established over the last few months. Therefore, I continue to favor further USD/CAD weakness at this stage while utilizing overhead resistance – namely 1.3400 – as an area of invalidation or entry opportunity. Further still, IG Client Sentiment data reveals retail clients are currently net-long, suggesting price may continue to fall since we typically take a contrarian view to retail positioning.
of clients are net long.
of clients are net short.
As I highlighted in my New Zealand Dollar forecast earlier this week, a severe reversal in NZD/CAD runs the risk of extending lower still as key support has come under fire. With the supportive band around 0.8675 coming under fire, continued NZD weakness could open the door to drastic losses if the band is broken. That said, traders should keep a watchful eye on NZD/CAD in the days ahead as it appears to be at a crucial junction.
NZD/CAD Price Chart: 4 – Hour Time Frame (January 2020 – August 2020)
To that end, a bearish break could spark further weakness while a successful hold of the long-term trendline might suggest a rebound is in store. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis and check out our guide to trading break outs.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX