Whilst we have seen the USD rally against a range of currencies, USDCAD strength has been relatively muted. Although there are significant resistance hurdles to overcome, we think this may be set to change. The decline into early May was contained by key uptrend and 200-day average support – currently seen at 1.0005/.9995 respectively – and the subsequent recovery leaves the market testing its short-term downtrend at 1.0260. Above here should maintain the recovery for a test of more important price and trend resistance at 1.0294 through 1.0343. Above this latter level is needed to suggest a more important medium-term turn higher may be under way, targeting 1.0448 next – the 2012 high. Through here, and we think a rally could really start to gain momentum, for 1.0658, then 1.0802/54 – the 38.2% retracement of the 2009/2011 collapse, and 2010 high.
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Credit Suisse