U.S. Dollar / Canadian Dollar Analysis /USD CAD News/Forecast
The Loonie has seen net long positioning soar to over 70,000 contracts on the latest reporting period according to Fridays COT report data – a significant rise and up from around 44,000 net longs the prior week. This represents the most significant net long Canadian dollar position seen in over a year. However, the poor NFP data will see many of the USDCAD shorts trapped in drawdown and a short squeeze could potentially see an attempt on parity in the first instance. If the risk aversion flows from late last week carry through into the new week this also adds weight to a potential higher USDCAD scenario.
- USDCAD is trading at trend line resistance and a break above this level may see further liquidation of the aforementioned CAD positions.
- There are multiple resistance levels above and the most obvious are parity and the 1.0050 price structure level. 1.0050 also has the longer term moving averages closely aligned as can be seen on the attached chart (365 EMA shown).
- A daily close above 1.0050 could see the USDCAD rise if stop losses are triggered in thin markets as we are seeing recently (EBS reported volume in April was down 26% YOY).
- A potential third touch of the second (higher) trend line may be worthy of note if the pair breaks horizontal resistance. If consolidation is seen over the next few days the horizontal resistance could potentially be aligned with a third touch thus seeing confluence.
USD/CAD Daily Chart