USDCAD Overnight Range 1.2558-1.2650            

USDCAD is probing support and the overnight low following better than expected Merchandise Trade data. The February Trade deficit narrowed to 0.984 billion.January’s deficit was revised from $2.5 billion to $1.5 billion. The Canadian dollar is also benefiting from general US dollar weakness as reduced NFP forecasts and holidays convince traders to trim long dollar positions.Relatively firm oil prices are not hurting either.

That was the story in overnight as well. The US dollar drifted lower against most of the majors (except AUD) in a cautious Asia and European session. Most markets are closed on Friday for Easter/Passover except for the US and just to keep things interesting,US nonfarm payrolls will be released. Gains of 300K and above or 200k and lower would create some drama while any job gains inside of 200-300K will just be noise.

AUDUSD came under renewed pressure in Asia on elevated risks of a RBA rate cut next week,touching a six year low. In Europe. The Iran /West nuclear talks are continuing despite the March 31 deadline lapsing. Greece debt renegotiation attempts are keeping EUR bulls on their toes. And EURUSD is offered.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.2590-1.2600 but needing a break of support in the 1.2550-70 zone to extend losses to 1.2510 and then 1.2460.  A move above 1.2600 will target 1.2650.

The long term USDCAD outlook is bullish. A sustained break above 1.2600 on a weekly chart, which represents the 50% retracement of the entire 2002-2007 range, targets the 61.8% retracement level of 1.3430. That move is far from a sure thing. USDCAD failed to extend gains much above 1.3000 despite many attempts in Q4 2008 and Q1 2009. The weekly chart is shaping up in an eerily similar pattern.

Chart: USDCAD weekly with Fibonacci

Today’s Range 1.2520-1.2600