USD CAD traders are taking advantage of thin trading conditions andfavorable U.S. economic reports to drive the Canadian Dollar markethigher this morning.
USD CAD traders are taking advantage of thin trading conditions and favorable U.S. economic reports to drive the Canadian Dollar market higher this morning.
This morning’s release of a report showing a rise in U.S. Existing Home Sales in the second quarter has helped renew demand for higher risk assets. This move has caught many traders by surprise and is triggering a profit-taking break in the USD CAD after six days of higher highs following a new low for the year last week at 1.0631.
The new short-term range is 1.0631 to 1.1075. This range sets up a retracement zone at 1.0853 to 1.0800. This zone is the next likely downside target and could play an important role in determining whether a bottom has been reached in the USD CAD.
Following a daily closing price reversal bottom last week that formed at 1.0631, the follow-through rally is usually short-covering. Once the shorts have been taken out, the market usually pulls back to at least 50% of the first leg up. This action may be taking place at this moment.
If a true bottom has been formed and the trend is getting ready to change to up then look for buyers to step in at 1.0853 to 1.0800.