By FX Empire.com
The USD/CAD pair extended its drop on Friday, where rising hopes that EU leaders will be able to craft a plan to ease the European debt crisis at next week’s EU summit boosted demand for higher yielding asset, which provided the Canadian dollar with bullish momentum to push the USD/CAD pair to the downside.
Moreover, strong earnings from U.S. companies on Friday pushed equity markets to rise strongly in the United States, which further boosted demand for higher yielding assets, as the U.S. dollar fell sharply against major currencies. Also, Canada released the CPI for the month of September, where CPI rose above expectations, adding more bullish momentum to the CAD, and pushing the USD/CAD pair lower.
Traders will continue to monitor the latest developments from Europe, where more optimism could provide the USD/CAD pair with more bearish momentum on Monday. Nonetheless, the uncertainty remains very high in markets, and that could lead the USD/CAD pair to fluctuate over the coming days until the EU summit begins next week.
Monday October 24:
We don’t have any major fundamentals from Canada or the United States on Monday, which means that the focus is likely to remain on Europe, and whether EU leaders will be able to reach an agreement to solve the euro zone debt crisis.
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