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Canadian Dollar Cross Pick 02.09.2012

Canadian Dollar Cross Pick 02.09.2012

David Song, Strategist

As the AUD/NZD continues to trade within the narrow range from earlier this week, it looks as though I will continue to sit on the sidelines going into the end of the week, but I will be keeping a close eye on the USD/CAD next week as the pair appears to be putting in a double bottom in February. Indeed, we saw the dollar-loonie make another run at the 78.6% Fibonacci retracement from the 2007 low to the 2009 high around 0.9900, and the pair looks primed for a reversal as relative strength index continues to come off of oversold territory. In turn, we will be watching for a break and a close above the 10-Day SMA (0.9974) to act as confirmation for a long USD/CAD trade. Once we see the pair clear the 10-Day SMA, I will be looking at the 20-Day SMA (1.0042) as a potential entry, and we may see the loonie come under pressure next week as the economic docket is expected to instill a weakening outlook for Canada.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.