USD/CAD: No Reason Not To Be A Seller At Discounted Prices

2019年2月18日

Until proven wrong, it appears as though this is a market currently dominated by a broad 1.32–1.3330 technical range, with the present flows aggressively selling the spot. The present dominance of CAD buy-side flows in the pair comes as a result of the bullish breakout in Oil coupled with an environment of USD weakness across the board. That’s the perfect bullish storm for the pair, one that in the majority of cases, as it’s the case at the moment, will shrug off any US-CA yield spread advantage.

Using as reference the micro slopes in the 25-HMA to gauge the short-term intermarket flows, this is a market that looks like is destined to reach its next target at 1.32. As long as the microflows remain in favor of Oil (inverted) and the DXY moving in the same downward direction, selling on rallies is the way to go. Be aware, the market is currently quite oversold, so where the red box has been dawn would be the ideal area where the sell-side campaign may be initiated with the best risk-reward prospects. Remember, this scenario assumes that current intermarket flows will remain favorable.