USDCAD: The pair has reversed its two-day weakness and climbed above its minor support at 1.0227, suggesting further strength is building up. However, two things need to happen to give the market more confidence. One, the pair will have to hold above the 1.0227 level and second, it has to return above its Oct 18’2011 high at 1.0262. This if seen will create scope for further gains towards the 1.0386 level, its Oct 10’2011 high. Its daily RSI is bullish and pointing higher suggesting further upside. On the downside, the risk to this analysis is for the pair to break back below the 1.0227 level and then return below the 0.9890 level, its Oct 27’2011 high. This will resume its short term downtrend towards the 0.9779 level, its Sept 16’2011 low. A firm penetration of here will set the stage for further declines towards the 0.9724 level. All in all, the pair remains biased to the upside on corrective recovery.
