[DanRath]

USD/has bounced from extreme overvaluation to rather extreme undervaluation metrics in the past few days. The current move to short-term undervalued status comes as USD/CAD has broken a modest uptrend at 1.1523. That uptrend also frames the recent wild swings in valuation. A more notable test for USD/CAD will be support at 1.1477. Other key support levels lie at 1.1418, a key support at 1.1355 and a more key support at 1.1222. As the underlying backdrop remains bullish, one should still treat pull backs as buying opportunities, for an eventual test of resistance at 1.1638, the recent high and 1.1722. For today, US equity futures are turning lower and oil prices, which had been over US$71, are not close to US$70 and recent upward moves in longer-term oil prices have run out of steam. Thus, the decline in USD/CAD overnight remains somewhat at risk. Hence, the key focus on 1.1477. The overnight activity (bearish USD/CAD) prompted a test of 1.1477, but that threshold has not yet broken. Overall USD sentiment, commodity direction and key support are going to have an interesting interplay today. On balance, watch support.

[DanRath]

USD/CAD remains dominated by the bullish trend reversal triggered on June 12, but there are three intriguing developments unfolding at the present time. The most notable is the heavily overbought valuation backdrop, which argues for a period of retrenchment, within a generally bullish structure. That bullish structure however, faces stiff resistance from a descending trendline at 1.1655 reinforced by key retracement level off the March-to-May sell off. Meantime, there is a key ascending trendline at 1.1229 drawn off the May low. A break of 1.1477, currently under threat could well prompt a valuation driven downturn toward 1.1313 and 1.1229. Such a pullback would still be consistent with a bullish backdrop. In fact, a pullback to those levels of support would create a more favourable valuation situation for a more vigorous test of resistance. USD/CAD would have to close below 1.0818 in order to generate a new phase of downward momentum.