USD/CAD still Dropping

Despite the resurgence of the USD from the improved treasury yields, the USD/CAD has only taken a momentary pause in its recent downward spiral. After retracing to approximately the 38.2% Fib level, the pair is once again headed south.

Although the dollar has done its best to remain strong against its cousin to the north, it looks as though the tables have turned in the minds of forex traders. Canada has recently released a slew of information confirming improved signs in the country, far greater than most expected. Add this to the steady rise of oil, and you get a much improved Looney.

From a technical standpoint, the 1.0800 will play a very important role in determining the future of the pair. Currently the pair is in a strong downward channel and has only paused slightly due to the 1.0800 level. This level has played an important role in the past; specifically we can see three prior examples where this line played an important role.

Although fundamentally the Canadian dollar is proving to be the stronger of the two dollars, the pair must overcome the technical resistance from the 1.0800 level to continue its decline. Forex trader's can look for increased volatility and uncertainty around this level and can possibly use this to capture short term trade opportunities.

Matthew Cherry
TradersChoiceFX - Forex Broker