Flash: USD/CAD correction has more room to run – TD Securities

FXstreet.com (New York) - According to the TD Securities Team, “Originally we thought the USD/CAD correction was nearing completion yesterday, however the spike in market volatility in the last 24 hours or so has driven funds quite significantly lower—and through what we had determined as key support at 1.0421.”

The intraday rebound in spot has been impressive and from short-term overbought, the market has swung to oversold. Short-term support at the 61.8% retracement of the late June rally at 1.0318 has effectively held and the near-term direction for funds should be towards modest gains – high 1.04s/low 1.05s – we think.

Ultimately, “We feel a bit chastened by the big swings in the USD since yesterday and our near-term conviction has been undermined a little by the infraction of support at 1.0421. The move may not stick though and the intraday rebound has been impressive from support in the low/mid 1.03 area (40-day MA at 1.0357).”