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Retail FX Remains Net-Short USD/CAD Despite Fresh Monthly High

Retail FX Remains Net-Short USD/CAD Despite Fresh Monthly High

David Song,

Talking Points:

- Retail FX Remains Net-Short USD/CAD Despite Fresh Monthly High .

- NZD/USD Oversold Ahead of Reserve Bank of New Zealand (RBNZ) Rate Decision.

- USDOLLAR Bullish Formation at Risk on Fails Test of June High (12,043).

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USD/CAD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the unexpected uptick in Canada’s Core Consumer Price Index (CPI), USD/CAD may continue to mark fresh monthly highs in the week ahead as the Relative Strength Index (RSI) pushes deeper into overbought territory, with the next topside region of interest coming in around 1.3064 (2009 high) to 1.3080 (61.8% expansion).
  • USD/CAD looks poised to resume the long-term bullish trend following the Bank of Canada (BoC) rate cut amid the deviation in the policy outlook; need the RSI to fall back below 70 to look for a near-term pullback.
  • The DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short USD/CAD since June 18, with the ratio holding near extremes as it sits at -2.89.


NZD/USD Daily Chart
  • NZD/USD may face a further decline in the week ahead as market participants anticipate the Reserve Bank of New Zealand (RBNZ) to implement a back-to-back rate cut at the July 22 meeting; all of the 19 economists polled by Bloomberg News forecast at least a 25bp rate cut to 3.00%
  • Bearish outlook remains favored for NZD/USD as the RSI retains the downward trend and pushes deeper into oversold territory, but signs of an end to the RBNZ’s easing cycle may generate a relief bounces in NZD/USD.
  • Next downside region of interest comes in around 0.6370 (50% retracement) to 0.6400 (61.8% retracement).

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Read More:

USDOLLAR Toying With Breakout

The Weekly Volume Report: Low Volume Rally In USD/JPY

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12026.3612038.3511998.910.0872.88%

Chart - Created Using FXCM Marketscope 2.0

  • Despite the uptick in the U.S. Consumer Price Index (CPI), the Dow Jones-FXCM U.S. Dollar may consolidate in the week ahead amid the failed attempt to test the June high (12,043); will retain a constructive view for the greenback as the 10-Day SMA (11,973) offers near-term support.
  • With the headline CPI expanding for the first time in 2015, signs of faster price growth may keep the Fed on course to normalize monetary policy later this year as the central bank continues to look for a stronger recovery.
  • Still waiting on a break/close above the 12,049 (78.6% retracement) region to favor a run at the 2015 high (12,162).

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--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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