Canadian Dollar Short-term Outlook: USD/CAD Tests Pivotal Resistance
Author: Michael Boutros, Sr. Technical Strategist
Date: March 17, 2026
Summary
The USD/CAD currency pair is currently retesting a significant resistance level after rebounding from early March lows. This pivotal resistance zone has previously capped advances for the past two months, and the outcome of this retest is crucial as it may dictate the next major movement in the pair.
Key Levels
Resistance levels are identified at:
- 1.3722/33 (key)
- 1.3759
- 1.3801/11
Support levels are noted at:
- 1.3645
- 1.3608 (key)
- 1.3540/51 (key)
Market Context
The current market situation is heightened by the upcoming interest rate decisions from the Federal Reserve (Fed) and the Bank of Canada (BoC). A decisive breakout above the resistance could signal a shift towards a more sustained recovery for the Canadian dollar, while a rejection could reinforce the existing range and maintain downside risks.
Technical Analysis
In the previous month’s analysis, it was highlighted that USD/CAD was testing resistance at the monthly range highs. The key level of 1.3722/33 is significant as it aligns with various technical indicators, including swing lows and retracement levels. The recent rebound from support at 1.3540/51 indicates improving momentum, but the broader trend remains unresolved beneath the resistance ceiling.
Chart Prepared by Michael Boutros, Sr. Technical Strategist
Outlook
The immediate outlook for USD/CAD remains cautious. A breach and close above 1.3733 would validate a breakout, suggesting a potential trend reversal. Conversely, a failure to break this resistance could lead to further declines, with a critical support level at 1.3540 that, if breached, would indicate a resumption of the downtrend.
Economic Considerations
Attention is also directed towards the Fed's upcoming Summary of Economic Projections, which may revise growth, employment, and inflation forecasts. Elevated energy prices, particularly due to geopolitical tensions, are likely to keep inflation risks in focus. The market is currently pricing in a 56% probability for a Fed rate cut in October, a significant shift from earlier expectations.
Conclusion
As the USD/CAD tests pivotal resistance levels, traders should remain vigilant, particularly with the Fed and BoC decisions on the horizon. Pullbacks are expected to be limited to around 1.36 if the price is to advance, with a close above 1.3733 necessary to fuel further upward momentum.