The USD/CAD is likely to see reversals flourish in the short term as financial institutions try to find equilibrium. 

As of this writing the USD/CAD is around the 1.35950 mark, but this morning’s early lows of nearly 1.35690 highlighted that strong selling was pronounced. Traders however should take into consideration that yesterday’s trading volume was lighter than normal because of U.S. and Canadian holidays. The USD/CAD has trended low since Thursday of last week when it hit a high of nearly 1.37865. Last week’s high came within sight of apex prices seen in March of this year.

USD/CAD Full Volume and Nervous Conditions Likely to be Seen Today

The USD did get weaker against most major currencies yesterday, U.S Treasuries also dropped their yields. While many financial institutions were not participating in the markets yesterday, there was enough price action to take into account the results and consider what will happen next. The USD/CAD has correlated to the broad Forex market certainly. The current price of the currency pair has the USD/CAD near values it started last Monday around.

But this value range when a full one-week perspective is taken into consideration shows the USD/CAD is still within sight of the higher limits of its one-month trading. Support is close below and will be important for speculators. However, important inflation data will come on Wednesday and Thursday of this week. And tomorrow the Fed’s FOMC Meeting Minutes report will be published. The combination of the inflation results, including Thursday’s Consumer Price Index numbers from the U.S. could lead to choppy conditions.

USD/CAD Speculative Volatility has been Wide the Past Week

• Day traders should consider their ability to handle the potential for rather fast price velocity, the USD/CAD has been volatile the past week even as it has trended lower the past few days.
• The U.S. will issue its PPI report tomorrow which will be monitored by financial institutions via the inflation results.
• Importantly later Wednesday, the U.S FOMC report will give insights regarding the Fed’s thinking about interest rates.
• A November U.S. central bank increase is already anticipated, but the question is if the Federal Reserve believes higher interest rates can be tolerated over the long term.

The USD/CAD is likely to see reversals flourish in the short term as financial institutions try to find equilibrium. The 1.36000 ratio above may become a rather interesting focal point over the next day as traders wait for the inflation reports that are coming and the U.S. Fed’s rhetoric.

Canadian Dollar Short-Term Outlook:

• Current Resistance: 1.36040
• Current Support: 1.35880
• High Target: 1.36875
• Low Target: 1.36640

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