Canadian Dollar Forecast Cautiously Bullish
USDCAD – The US Dollar refuses to break lower against the similarly resilient Canadian Dollar, giving us pause in our earlier calls for USDCAD weakness. Trading crowds have remained net-long the USD versus its Canadian counterpart since the pair failed at C$1.0300 in January and have consistently added to those long positions.
The number of traders long exceeds the level of shorts by 2.36 to 1. In most circumstances we would take this as a fairly strong contrarian signal that the pair could continue its declines. Yet caution is advised as the USDCAD has failed to stay below key support at C$ 0.9900.
We remain cautiously bearish, but the Crude Oil price-correlated Canadian Dollar may need a sharp rally in commodity prices to force a larger break higher (USDCAD lower).
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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