USD/CAD’s sharp appreciation through September is showing signs of flattening out. In the view of economists at Scotiabank, the pair needs to break below the 1.3650 mark to sustain further losses.
More choppy range trading in the short run
“Price action is choppy and daily/weekly trend signals are showing some signs of weakening; intraday (1 and 6-hour) DMI oscillator measures have turned decidedly flat. These signals suggest more, choppy range trading in the short run at least.”
“We note that last week’s spike high at 1.3972 was followed by the formation of a bearish key reversal signal (new cycle high, lower close) on the daily chart.”
“USD-bearish price signals are not prompting a significant reaction at this point and the longer run DMIs indicate a lot of residual upside momentum remains in this market. Still, we note the bearish reversal signal came at a sensitive point (near the 1.40 level) and that high has not been challenged again so far.”
“More obvious USD weakness (we think below 1.3650) is needed to inspire a deeper drop at this point.”