The breakdown trade recently issued in NZDCAD has seen the market extending lower to reach its first target at .8475. Despite some corrective action, NZD is firmly back under pressure now with the US Dollar rebounding higher once again. With the retail market around 96% long here and with the US Dollar fighting back, there is plenty of room for the current decline to continue towards the next target at the .8351 level.

Keep An Eye On

Canadian CPI later in the week will be a key release for this pair. Given the hawkishness around the BOC, a strong reading this week will no doubt further strengthen bullish conviction on CAD, weighing on the pair near-term. Important to also monitor USD and risk flows as the current dynamic of weaker equities and a stronger USD will keep NZDCAD pressured should it continue.