[Dan]

USD/CAD - A firm weekly close for funds on Friday – back above medium term
support-turned-resistance levels in the low/mid 1.11s – may well see the corrective undertone for the USD extend further in the short term. The short term (6-hour) chart shows that the market is running into some resistance in the low/mid 1.12 area this morning, though we note the 1-hour chart also suggests that USD/CAD is attracting firm bids on dips through the upper 1.11 area intraday). It looks like a battle for direction and while we suspect that the USD bulls may win out in the short term (risk is for a test of the 38.2% retracement resistance at 1.1440 at least), our jury is still out on whether the turn in funds last week represents a significant longer term turn in funds. USD/CAD below 1.1040 is needed to revert to bearish in the short term but that level looks very distant at present



EUR/CAD – The cross remains in a downward trajectory generally and the short term MA signals continue to point to the downside. We have redrawn slightly the parameters of the three month bear channel and note that resistance is likely to converge with the 21-day MA in the next few days, forming very strong resistance at 1.5720/30. However, EUR/CAD closed last week on a bullish note and we would be forced to reassess our bearish bias now on a push through the low 1.57 area.

[Dan]

USD/CAD – Short term trend resistance to the USD advance proved stronger than expected yesterday after all and the downside support points in the upper 1.10 (through low 1.11 area this morning) not as far away. The turn lower in USD/CAD looks quite spectacular on the short term (6-hour) chart above and will be more impressive if intraday losses are sustained through the close; that would put a firm lid on the daily chart in the upper 1.12 area and imply little further scope for topside corrective moves. Despite the strength of the USD rebound late last week, we remain to be convinced that the broader trend lower in funds has turned and the conviction on this front is a little stronger this morning. Key short term resistance is 1.1280/85 now while support stands at 1.0931.