Canadian Dollar Forecast Cautiously Bearish
USDCAD – The US Dollar has recently refused to break lower against the Canadian Dollar, and we expect the USDCAD may trade flat or actually break higher through upcoming trade. Forex trading crowds have remained net-long the USDCAD through 2012 as the pair made frequent tests of the psychologically significant C$1.0000 and C$0.9900 levels.
Normally we would claim that such one-sided sentiment would point to further losses. Yet the pair has refused to break, and a bearish market that isn’t declining isn’t bearish at all.
We’ve seen a recent pickup in USDCAD selling, and indeed this may be the impetus for us to call for a USDCAD topside breakout. Yet the pair has shown little conviction in either direction, and we’ll wait for a more substantive shift and break before taking a strong stance.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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