Forex Investment and Currency Trading

• USD/CAD trading well within recent lowered ranges. There has been no test of bullish
  breakout, but there is no upward momentum building.
• USD/CAD’s overnight low is again close to short-term support at 1.0424. The sell off from
  recent highs has stalled, but USD/CAD lingers well below rally triggering resistance.
• USD/CAD remains dominated by the bullish breakout above 1.0343 on August 4. However, the rally went to far too fast and USD/CAD remains in consolidation mode. The next major move is still expected to up not down, until the bullish breakout is rejected.

Overnight Spot Trading Activity: What Asia Gives, London Takes Back
Asia: Trading in USD/CAD was again quite light through the Asian session. However, the tone was again heavy with USD/CAD trading toward the bottom of the recent trading range. However, there is a decided lack of momentum to drive below 1.0424, which would portend a test of 1.0343 and the bullish breakout on August 4. Interbank buyers helped boost USD/CAD.
London: USD/CAD rallied through the London session, but the move only unwound Asia’s sell off. interbank sellers were quick to emerge at the London high. USD/CAD has been trapped in a technical trading range since August 21, when Canadian July CPI was released.

Short-Term Outlook: Base Building for Next Phase of Rally
USD/CAD had been trading between 1.0424-to-1.0566, but has now settled into 1.0424-to-1.0496. The consolidation from 1.0726, confirmed on the break below 1.0566, has thus run out of steam. However, the expected rally has failed to materialize, and requires a clear break above 1.0496 and 1.0566.
Medium-Term Outlook: Focused on 1.0464 and Oversold Valuations
From a medium term perspective the key level of late has been 1.0464, pretty well the midpoint of the recent range since the valuation-based sell off stalled after the sharp decline on August 21. A confirmed break of that threshold would set the stage for a test of the bullish breakout that occurred on August 4.