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USD/CAD Retail FX Positioning Back at Extremes Despite Fresh 2016 Low

USD/CAD Retail FX Positioning Back at Extremes Despite Fresh 2016 Low

David Song,

Talking Points:

- USD/CAD Retail FX Positioning Back at Extremes as Pair Slips to Fresh 2016 Low.

- USDOLLAR Extends Losses Ahead of NFP- Average Hourly Earnings in Focus.

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USD/CAD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • With price & the Relative Strength Index (RSI) breaking down from the bullish formations from earlier this month, the near-term series of lower highs & lows in USD/CAD raises the risk for a further decline in the exchange rate especially as the pair tags a fresh year low of 1.2857.
  • With Canada’s Gross Domestic Product (GDP) report showing an annualized 1.5% expansion in January, the recent batch of positive developments may spur a material shift in the monetary policy outlook as Bank of Canada (BoC) Governor Stephen Poloz turns increasingly upbeat.
  • Would like to see a closing price below 1.2930 (61.8% expansion) to open up the downside targets, with the next region of interest coming in around 1.2800 (38.2% expansion) followed by 1.2620 (50% expansion) to 1.2630 (23.6% retracement).
  • The DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd remains net-long USD/CAD Since February 25, with the ratio hitting an extreme reading earlier this month as it climbed just shy of +2.00.
  • The ratio currently stands at +1.57 as 61.% of traders remain long, with long positions 26.2% higher from the previous week.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11882.9911913.9711861.61-0.0883.75%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite forecasts for another 205K expansion in U.S. Non-Farm Payrolls, the bearish formation in the Relative Strength Index (RSI) as well as in price may generate further decline in the USDOLLAR as market participants mull the timing of the next Fed rate-hike.
  • With the U.S. economy approaching ‘full-employment,’ market participants may show a larger reaction to the Average Hourly Earnings figure as Fed officials continue to point to the downward tilt in inflation expectations.
  • Following the close below 11,898 (50% retracement), the downside targets remain in focus with 11,826 (61.8% expansion) to 11,843 (38.2% retracement) on the radar.

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Read More:

USD/MXN – Big Support Test Coming Up

USD/CAD Technical Analysis: All Eyes on 1.2835

COT-Small Trader Net Long Position in AUD is Largest Since July 2014

USD/JPY-More at the 110.66 Low Than You Might Think

Get our top trading opportunities of 2016 HERE

--- Written by David Song, Currency Analyst

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

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