TD Securities give their latest technical assessment of where the Canadian dollar (CAD) is likely to move next against the EUR, GBP and USD.

First, for reference, we see the following spot levels following the release of the December US Non-Farm Payroll data. (Markets closed @ weekend).

The British pound to Canadian dollar exchange rate (GBP/CAD) is converting at 1.7835.The euro to Canadian dollar exchange rate (EUR/CAD) is converting at 1.4059.The US dollar to Canadian dollar exchange rate (USD/CAD) is converting at 1.1441.NB: The above quotes are taken from the wholesale market and your bank will affix a spread at their discretion. However, an independent FX provider will guarantee to undercut your bank’s offer, thereby delivering up to 5% more currency.

To gaurd agains currency fluctuations we recommend discussing a trading strategy whereby optimal levels are automatically executed.

Pound vs Canadian Dollar Forecast

Shaun Osborne at TD Securities tells us that while the sterling / Canadian dollar direction remains difficult to decode, the pair is starting to show a more positive bias:

“GBPCAD’s rebound from the test of strong support at 1.7545/50 has stalled around the 40-day MA/resistance at 1.7942/1.7875-80 respectively.

“Even if the GBP is doing its best impression of a random walk, the technicals are at least providing some basis for orientation.

“Above 1.7875/80, we would expect the GBP to push on towards the upper end of the Q4 trading range at 1.8250/00—though perhaps not much more.

“Weak daily trend momentum favours range trading but we do not rule out a little more GBP strength if the cross can get a foothold above 1.80.”

Euro vs Canadian Dollar Forecast

Osborne notes that while EURCAD is generally negatively aligned, trend momentum indicators are not all in bearish alignment.

"We remain cautiously bearish on the outlook for EURCAD overall, as noted previously, so we do not expect the pop higher in the cross seen on 4/12 to extend significantly.

“Now, the EUR’s failure to push through the upper 1.42 area again—where the 28– and 40-day MA signals converge—suggest that another push to the upper end of our medium-term, bear target zone (1.35/1.38) is developing.

“Trend momentum signals are bearishly aligned but are not yet sufficiently strong (again) to make sustained weakness from here a high conviction call. We remain cautiously bearish.”

Note the strong rally following the December ECB meeting. This could present an opportunity for those looking to buy Canadian dollars with their euros the chance to transact.

US Dollar to Canadian Dollar

According to Osborne the broader backdrop in USD/CAD is constructive with the USD breaking free of the November consolidation (bull flag) consolidation on the shorter-term charts:

“The only hang up at the moment is the heavy price action that followed this week’s test higher.

“We may see the low 1.13s retested near-term but expect firm support on dips.

“The daily chart tells a similar story; the test of the 1.12 area last month proved fleeting and the combination of the trend channel base (redrawn) and 40-day MA provided comfortable support for the USD ultimately, much as we expected.

“New highs are needed to keep the longer-term bull trend intact—but that might not come soon.

“Monday’s turn lower from the high 1.14s has left a big, bearish (key reversal day) signal on the chart which may hinder progress for now and put a little more pressure on the 1.13 area. We don think the signal heralds a major reversal, however. Look to buy modest dips.”