Forex Investment and Currency Trading

USD/CAD is looking quite vulnerable to the downside once again – which is quite the change of tune for this market after yesterday’s run up through the upper 1.12 zone. The rebound since Friday has barely made any sort of real impression on the major retracement zone of resistance and the failure to hold the break through trend resistance yesterday suggests that the underlying trend is lower still. The market is already leaning quite hard on the base of the upward channel that has guided price higher since late last week – a bear flag – and a clear break under this support zone should tip funds quite sharply lower again. The bias is for funds to continue lower (based on Canada’s stronger structural position and broader USD bearishness) in the medium term but even we are a little surprised at how quickly this market has turned around. Crude oil has perked up a little again and oil patch M&A speculation (TSX-listed Addax Petroleum a potential target for a Chinese acquirer) is CAD-supportive but a generally sour USD mood is also helping, with the USD down in aggregate against its major currency peers. The loss of 1.1050 may see the sell off in funds accelerate towards the low 1.09s at least in the short term and – likely – a retest of the recent lows.