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Andreas Zanin
Analysis | July 7, 2021

USD/CAD & Crude Oil Outlook and Forecast

We have looked at USD/CAD in previous posts and we have been bullish since the 1.200 level and we are now below the big 1.2500 level and view the USD as a buy  on a breakout or move back to support. We are looking for a stronger USD anyway but also think a  turn down in commodities will  give the USD an additional boost and have updated our view on Crude oil.

We expect the USD to rally on all major currencies longer term. The market is short and bearish the USD and in the majors its the CAD where large speculators (Hedge Funds) hold a major long position which can be seen on the COT Net Traders Positions below. Despite a near 500 pip rally in the USD against the CAD, large speculators are still holding close to a year high in terms of CAD longs. Smart money commercial hedgers while they have lightened CAD shorts still hold a sizeable position:

We are looking for more USD upside as large speculators are taken out on stop.

Technical Analysis

On the chart below we are sitting just below big resistance at the 1.2500 level. If we breakout above this level we would expect follow through buying up to 1.2800  and have stop behind first level support. If we pull back to first level support we would see the USD as a buy on strength with a stop back behind major support at 1.2300.

Crude Oil

We are looking for a turn down in commodity markets generally to hurt the commodity currencies such as the CAD. We have seen some corrective action in commodity markets but crude oil, has been firm but after breaking big monthly resistance at 75.00 we have fallen back and if we take out support on the daily chart we would expect a major correction to the downside.

 

Research provided by LearnCurrencyTradingOnline.com

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