The Bank of Canada left rates unchanged at 4.25% for the seventh consecutive meeting. There was the usual rhetoric for the Canada bulls of higher than expected inflation that appears to be mostly contained at 4.25%. Then, the BoC gave the Canada bears something to chew on. They mentioned that the US economy is slowing more than originally though, and is beginning to effect their export markets. Considering Canada just moved into deeply oversold daily chart support, USD/CAD shorts began to take profits after the 6-big figure slide in less than 2 months. I have been watching and waiting for zone to trade for weeks now, and so far, like what I see in the price action.

Technically, there is a powerful pair of Fib measurements pointing to 1.1200 support. First, the .786 retracement of late '06, early '07 move up falls in at current levels of 1.1213. Second, the 2.0 Fib projection level of the move lower from that same top is at 1.1194.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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