[Emalva]

The Canadian CPI data released a short while ago are probably a wash for the CAD on the session; a slightly higher than expected BoC core rate in March (and the March year) will be offset by a slightly weaker than expected headline gain in the month. USD/CAD rallies continue to generate willing sellers and however the underlying trend remains firmly to the downside – the break through the low 1.20s this week suggests medium term potential for a push to the mid 1.17s is high. In the shorter term, we have to be wary of a corrective squeeze on long CAD
positions – especially considering the better tone of the USD broadly at the moment. Yesterday’s break of the 1.20 line may have sated USD bear appetite for the moment and the market has broken through short term trend resistance overnight; the 1.2150 area has capped gains twice in the past 24 hours and
likely remains an important pivot point, ahead of the key short term resistance at 1.2175/85; above here and the market will be free to retest the 1.2290/00 breakdown zone.