[Calxy]

USD/CAD – We think the bearish outside range reversal day (new high, lower low and lower close) from Wednesday’s session remains the salient feature of the short term chart; the reversal came after the market failed to hold above the 1.1050 50% retracement resistance and Thursday’s lower close supports the reversal scenario. We favour selling rallies from here, even though short term price action suggests that the market has settled into something of a range between 1.0790 and 1.0910 over the past day and a half and there is a residual risk of a retest of the 1.1050/75 area. Short term, a break under 1.0790 should renew downside momentum for a test of 1.0700/50. This week’s rally also stalled just under the 55-week MA (1.1115) and the large sell off from the inter-week high leaves a heavy tone to the weekly chart. The constellation of short, medium and long term resistance points above 1.11 suggests a very tough slog for the USD to improve significantly at the moment.