USD/CAD Classical Technical Report 07.27
USD/CAD: The break to fresh yearly and multi-month lows below 0.9445 certainly compromises our constructive outlook and potentially exposes a retest of the historic lows from 2007 by 0.9060. However, before getting overly bearish and conceding a deeper setback to 0.9060, we would like to see how the market trades over the next few days to determine if the latest bout of weakness below 0.9445 can be sustained. A break and close back above 0.9500 could once again suggest that a base is in place and put the pressure back on the upside. Cyclically, this market looks to be quite stretched (on a longer-term basis) and we therefore see risks over the near term for a major reversal back in favor of the USD. Given where we are trading, looking for this trend reversal at current levels becomes all the more compelling.
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