Breakout Potential For US Dollar/ Canadian Dollar Pair (USDCAD) Has Analysts Split

Moving at its own pace, USDCAD has been ushered back to major resistance through broad dollar buying; but hesitation once again reveals the different nature of this pair as compared to the other majors. See which of our analysts are following USDCAD specifically in our focus of the Canadian dollar and the arguments for a breakout or reversal.

Currency Strategist - John Kicklighter

My picks: Potential USDCAD Breakout
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week

The dollar is rallying hard; and many of the majors are pushing through critical technical levels. The biggest driver of this market-wide move comes from EURUSD which may have defined a new trend with a break through a six-year trendline. However, the currency needs substantial momentum to drive such substantial breakouts in other pairs. Seeming to always move on its own accord, USDCAD often breaks correlation to other majors when major technicals come into view. Indeed, 1.08 is a major 61.8% fib retracement and range high for price action through September. Fundamentally, the dollar's advance could easily be swayed by the bailout vote and/or NFPs due tomorrow; so the event risk for momentum is there for a potential breakout to the upside.

My primary concern for USDCAD is for the potential bullish breakout; though a reduced size short with tight stop could take advantage of a possible reversal without putting up too much risk in the event of the upside break. My setup is based on price action of 1.08. A push above September 11th highs (1.0820) could instigate a trade, but a close of a higher time frame bar above the even level at 1.08 would be the cautious approach. Considering the pressure that has held up in this area, a breakout could find significant follow through; but we need to be careful because a move ahead of the major event risk could be subject to a sharp reversal should fundamentals stand opposed to the dollar's move.

Currency Strategist - Terri Belkas

My picks: Short USD/CAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days

USD/CAD surged higher this morning as the greenback strengthens across the board following last night's Senate approval of the Treasury's bailout bill. However, as we see so often, extensive moves tend to be followed by technical retracements so I'll be looking for a short-term decline toward support at the 50% fib of 1.0546-1.0787 at 1.0667 with a stop above the morning highs of 1.0787.

Currency Analyst - John Rivera

My picks: Short CADJPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days

The continued decline in commodity prices and the increased risk aversion in the markets is a formula to short the CADJPY pair. I have been successful in the past playing commodity prices against risk sentiment with this pair and I see an opportunity here with a target of 96.50.

Currency Analyst - David Song

My picks: Short EUR/CAD
Expertise: Fundamentals Combined with Technicals
Average Time Frame of Trades: 2 - 10 Days

After peaking to 1.6221 on August 7th, the EURCAD has come under heavy selling pressure to break below key support level. The failure to move higher suggests that the underlying downtrend will lead the pair lower over the week, and the 50 day SMA, which has already moved below the 100 day SMA, looks to be crossing below the 200 day SMA. The recent developments have favored a bearish outlook in the near-term, and I expect the pair to test the 2/27 low of 1.4678 for support over the next few days

DailyFX

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