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Overnight Spot Trading Activity
Asia: USD/CAD continued to drift higher overnight, as weak Asian equity markets kept risk aversion levels elevated. The market encountered buying interest near the 1.1000 threshold during the Asian trading session as concerns over a Chinese led moderation in economic growth due to a tweaking in central bank policy buoyed risk aversion levels. With AUD/USD and NZD/USD coming under mild selling pressure as a result of this development, USD/CAD rallied from 1.0992 to 1.1048. However, the North American high at 1.1048 served as an effective ceiling for prices during the session.

London: The London session was relatively quiet, with pullbacks to the 1.1025 area attracting renewed buying interest as risk averse sentiment prevailed. Light purchases of EUR/CAD were also noted, allowing USD/CAD to reach a high of 1.1077 in the process.

Canadian Trade Data and FOMC in Focus Today
The June Canadian trade data and the FOMC interest rate decision stand out as today’s may event risks for the market. Worse than expected trade data would likely keep the CAD under some selling pressure. In the U.S., today's FOMC interest rate decision will be watched for any details on a more concrete exit strategy from QE. The market is expecting the Fed to keep rates unchanged at 0.25%.

Short-Term Outlook: Cluster of Support Present Between 1.1014 and 1.0934

The short-term uptrend that is in place indicates that support at 1.0983 and 1.0934 should attract buying interest for an extension to resistance between 1.1089 and 1.1102. An hourly close above 1.1102 would project additional gains toward the 1.1225 area.

Medium-Term Outlook: Corrective Scenario Unfolds After Oversold Divergence Forms

Resistance at 1.1119 now in view after yesterday’s close above 1.0941. The retracement phase in USD/CAD remains in place after the development of a bullish divergence from oversold levels on the daily studies. With support located at 1.0941 and 1.0771, we note that yesterday’s daily close above 1.0941 now projects additional gains to resistance at 1.1119.