The USDCAD pair tried to recover during the course of trading on Friday but o far today, that effort seems to be futile. The dollar is clearly on the backfoot all across the board and that can be seen to be having an effect on the price of this pair. We have seen the pair break through the lows of the range over the last week or so and this poses an ominous sign for the traders.
USDCAD Under the Pump
The pair had been threatening the highs of the range just a couple of weeks back and hence it is indeed a surprise to see that reverse during the last week. Also, it has to be kept in mind that the reversal has happened during the fag end of the year and there has not been much fundamentals that could be attributed as the cause for the reversal. Of course, we have seen the oil prices moving higher during this period and this could be noted as one of the causes for the CAD strength but this move would not have been possible without dollar weakness.
The reason for the dollar weakness is what is a bit of a quandary and that is why we have been advising the traders to wait and see what happens over the next week or so. The European and the US markets return from their long weekend and we are also likely to see more and more traders return back to their desks over the course of the next one week. This is going to increase the liquidity and we are going to see what the traders think about this move lower when they return.
Looking ahead to the rest of the day, we do not have any major news from Canada or the US during the day and so we can expect to see the market driven by the flows as the traders decide on which way the dollar should be moving. It points to an interesting day of trading ahead.
This article was originally posted on FX Empire
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