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USD/CAD reverted back mildly higher on Friday, shifting into a near-term consolidation around the 1.2783/29 October and May 2018 lows. Looking ahead, the Credit Suisse analyst team is closely watching the key support at 1.2707/00, removal of which would see further downside unfold.

Key quotes

“USD/CAD has not managed to follow through from last week’s break of the 1.2783 October 2018 low, as the market remains in a consolidation phase around this level. Hence, further sideways trading is likely to unfold at first.”

“Post this consolidation, we remain biased lower over the medium-term, as a large ‘head and shoulders’ top still in place. Support is seen initially at 1.2720, then back at 1.2707/00, removal of which should see a move back to the 78.6% retracement of the 2017/2020 surge at 1.2620, where we would expect to see fresh buyers at first. Big picture, we expect a move below here in due course with support then seen next at 1.2528.” 

“Resistance moves initially to 1.2764, then 1.2793, with 1.2829/33 ideally capping to keep the immediate downside bias intact. Removal of here could see a move back to 1.2874/81, where we expect to see another attempt to cap.”