CAD: Momentum Traders Pile Into The Short Trade; What's The Trade? – TD

TD FX Strategy Research notes that USD/CAD continues to trade well in excess of its cyclically implied level despite the weakness in some of the underlying drivers (lower CAD rates and oil).

However, TD argues that USD/CAD price action has run well-ahead of the fundamentals since key technical breaks are signaling triggers for momentum traders to pile into the trade especially following the break of the 50% retracement level which puts topside resistance near 1.3840.

Even so, TD thinks the negative CAD meme will slowly run its course as momentum might start to wane soon with technicals (like RSI) also pointing to stretched levels. When 

As such, TD argues that the fundamental case favors fading the USD/CAD rallies once momentum starts to slowdown as the pair inching closer to its topside technical resistance.

USD/CAD is trading circa 1.3720 as of writing. 

Source: TD Securities Research

The article is published by one of the foremost sources of Forex trading information. Link to the original article above.

from eFXNews

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