The market’s favourite trade may be vulnerable
Over the last 4-5 months US Dollar bulls have been biased towards long USD/CAD positions as a way of maintaining their longer term bullish bias on the green back. As is discussed in the USD/CHF piece in this publication we believe that there could be a final squeeze applied to many of the major USD crosses, targeting 0.8500 in USD/CHF and 1.4000+ in EUR/USD. With this in mind US Dollar positive positions that have become favoured by the market generally could face a short term
setback which the majority may be unable to withstand. In this respect we believe that USD/CAD is one of the most vulnerable to a downside squeeze whereas EUR/USD may not push higher to the same degree, in percentage terms. This makes a correction lower in EUR/CAD a distinct danger if a short-term move against the US Dollar were to materialise. We discuss the technical backdrop for this Euro cross below.
Read the full report: FX Research
MIG Bank