USD/CAD Weekly Chart

Technical Outlook: In last month’s USD/CAD Weekly Technical Perspective we noted that, “50% retracement of the 2017 range- note that this level converges on the downslope resistance and has continued to govern the highs since late-October. Heading into the close of the year the focus is on a break of the 1.2575-1.2927 range to offer guidance (downside break favored).”

An outside weekly-reversal candle off 1.2927 in mid-December shifted the focus to slope support with a break lower last week keeping the broader focus lower in USDCAD (note that December also marked and outside monthly-reversal candle- bearish). That said, a weekly close below the long-term 200-week moving average would be needed to keep the immediate decline viable.

USD/CAD Daily Chart

The daily chart highlights near-term confluence resistance at 1.2598 where the October opening-range high converges on the 100-day moving average. This level is backed by the 2012 trendline (red) with our broader bearish invalidation level steady at the slope extending off the 2017 highs (purple) currently ~1.2750s.

USD/CAD 240min Chart

Notes: A closer look at price action sees the pair trading within the confines of a descending pitchfork formation extending off the late-October high. Interim support targets rest at 1.2485/89 backed by the lower median-line parallel (currently ~1.2440s) and the triple-top measured objective / 61.8% extension at 1.2415/23– Note that this threshold converges on the lower parallel heading into next week.

Bottom line: Near-term bullish divergence into these lows highlights the threat of a recovery here but ultimately we’ll favor fading strength in the pair while below the median-line / 1.2660. Keep in mind that tomorrow represents considerable event risk for the pair with the simultaneous release of the U.S. Non-Farm Payroll report (NFP) and Canada employment figures likely to fuel added volatility in the USD & CAD crosses.