As a country which relies heavily on exports to the US, its officials have responded to loonie's strength by cutting 25 basis points in December. As we are seeing now, USD/CAD continues to appreciate despite broad USD weakness. For the downtrend started in December 2006, USD/CAD looks like it is in a corrective phase. Wave 3 is underway and resistance is expected at 1.0250, which is the high formed in December 2007. Pullback should find support at 1.0100-1.0120. My bias is that we should see a test of its key resistance at 1.0480-1.0500 before we can further decide the direction of this pair.
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