USD/CAD sinks to two-month low as the breakdown continues

Confirmation of the break?

You can never trust a breakout in the final week of the year. Liquidity is minimal and fakeouts are frequent.

But it's not the last week of the year anymore. It's the first week of 2018 and liquidity has returned.

While flows can continue to skew moves early in the year, the signal from USD/CAD remains strong. The pair is breaking out of the 1.2650-1.2920 range that persisted in Oct-Nov-Dec.

At the moment, the pair is near a session low and testing bids at 1.2500. If that gives way, the mid-October low of 1.2433 is level to watch and nicely mirrors the measured target of the prior range.