The USD is weakening sharply across the board, with USD7CAD testing below key long-term support at 1.2062/47. According to economists at Credit Suisse, the breakdown should be sustained, although a weekly close is needed to confirm a multi-year “double top”. Next supports would then be seen at 1.1916, before their long-term objective at 1.1424/1.1318.
Short-term momentum reaccelerates
“USD/CAD is testing below regime defining support at 1.2062/47. Short-term momentum is reinforcing this move, reaching the strongest levels since June 2020 and showing no signs of tiring. This suggests the breakdown should be sustained and we therefore look for a resumption of the strong medium-term downtrend, with a weekly close below 1.2062/47 also confirming a multi-year ‘double top’ to dramatically reinforce our medium-term bearish outlook, with the next level at 1.1916.”
“Bigger picture, we scope for an eventual move to 1.1424/1318.”
“The pair should now ideally hold below the 1.2047/62 lows to maintain the breakdown, with the risks staying directly lower whilst 1.2203/2235.”
