The Canadian and Australian dollars enjoyed the greenback’s weakness to make breakouts. This happened without any substantial data coming out of these countries, and also on low volume. Positions should be carefully made on these currencies.
In the meantime, EUR/USD and GBP haven’t made impressing moves. That’s another reason to be cautious about these moves.
AUD/USD managed to beak the all-important 0.8950 resistance line. This line worked as strong resistance in the past, and after an initial bounce, the Aussie broke this line and remained above it for a long time.
Contrary to those events, this break should be taken with a grain of salt. The last week of the year, between Christmas and New Years Eve, is probably the slowest in the year. Many traders are on vacation, and the volume of trade is low.
Currently at 0.8980, this breakout could be proven false soon. If AUD/USD does stay above this line, the move can be clearly confirmed only next week, when everybody’s back in business and volumes will be high again.
Check out the AUD USD forecast for more support and resistance lines.
The Canadian dollar has a similar story: USD/CAD broke below 1.04 and now trades at 1.0390, after reaching 1.0367. Also here, an important an well-tested support line was broken – 1.04.
The Canadian dollar showed strength in the past weeks, and had good reasons for it. While other currencies surrendered to the dollar, USD/CAD remained in the same trading range: 1.04 to 1.0750. Now it took one step further and went lower. Also here, the low volume requires great caution.
For a deeper technical analysis of USD/CAD, check out the Canadian dollar forecast.Get the 5 most predictable currency pairs