Forex retail trading crowds have aggressively bought into US Dollar (ticker: USDOLLAR) weakness against the Canadian Dollar, giving us reason to call for further USDCAD declines. Traders are now their most net-long USDCAD since the pair last traded below the psychologically significant C$1.00 level in May.
A broader US Dollar uptrend admittedly limits our conviction in calling for major USDCAD losses. Yet one-sided retail sentiment warns that the pair may continue its recent declines.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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