The USDCAD pair continues to weaken and even the support seen at the lows of the most recent range has not been able to hod this one way traffic and we are seeing the support break down and the pair is now trading below the 1.2550 region as of this writing. There does not seem to be any respite in sight for the bulls in this pair and it looks as though more pain is likely to follow.
CAD Continues to Gain in Strength
As we have been discussing over the last few days, the move lower has been triggered by the weakness in the dollar and the strength of the CAD and that is the reason why the move in this pair has been much more profound than what has been seen in the other pairs. We are not yet sure of why the dollar has been weakening across the board and the only reason that we could find was the fact that the liquidity is low and maybe the dollar bears are using this as an opportunity to sell the dollar.
This will become clear in due course of time as the liquidity begins to retun back into the markets from next week. But the reasons for the CAD strength are much more clear as it has been brought about by the strength of the oil prices and also due to the strong economic data that we have been seeing over the last few weeks from Canada. This can explain some of the weakness in the pair but not all of it though.
Looking ahead to the rest of the day, it is the last trading day of the year and the bears would like to see a close below the 1.25 region before they go off for the long weekend. It is more of a psychological level than anything else and it would be interesting to see if they can manage that today.
This article was originally posted on FX Empire
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