USD/CAD Exchange Rate Prediction – The USD/CAD Rises but Faces Headwinds

The USD/CAD rallied on Friday for a second consecutive trading session despite mixed data out of the United States.  U.S. Treasury yields moved sideways. Durable goods orders came in weaker than expected. Jobless claims declined, but the revisions to the prior months offset the decline. While the exchange rate was able to rise, it faces strong resistance near the former breakout level. New robust U.S. economic data will likely be the catalyst that drives the exchange rate higher.

Technical Analysis

The USD/CAD rebounded after initially moving lower, bouncing at support which is seen near the 10-day moving average at 1.2285. Resistance is seen near the former breakout trend line near 1.2364. Additional resistance is seen near the 100-day moving average at 1.2405. The 10-day moving average crossed above the 50-day moving average, which means that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is positive but decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

Durable Goods Orders Rise Less than Expected

According to the U.S. Commerce Department, durable goods climbed 2.3% in May, reversing a 0.8% drop in April. Orders for aircraft shot up 27.4% after climbing 31.5% in April. Excluding transportation orders, durable goods orders rose 0.3% last month, down from a 1.7% gain in April. Orders for nondefense capital goods excluding aircraft, a proxy for business investment, dipped 0.1% in May after rising 2.7% in April.