The Canadian dollar has continued to come under heavy selling pressure once again today, driven by a resurgent US dollar, which has now broken through the key 81.30 level on the daily chart of the dollar index, to move firmly higher from this platform of support which is now in place.

Since the reversal from the deep resistance at 0.9400, the decline for the CAD has been steady, but is now increasing in momentum, with yesterday’s wide spread down candle breaking through the potential support in the 0.9115 region, and now looking set to test the next level below in the 0.9060 region with further potential support now waiting in the 0.9020 and 0.9000 price regions.

The volumes too are confirming the negative picture at present, with Monday’s attempt to rally, associated with low volume on the daily chart and duly engulfed with yesterday’s high volume at 60,493 contracts traded in the session.

Provided today’s price action holds below the 0.9110 level, then expect a further move lower, but with the US dollar ( the red line ) now moving deeper into overbought territory on the currency strength indicator, we are now reaching an extreme in this timeframe, and whilst the Canadian dollar (the purple line) has some way to go before reaching the oversold region, the current phase of price action may indeed be reaching a conclusion in the medium term, with the pair finding a bottom in the 0.9000 area or immediately below.

Editor’s Note: Equity investors/traders can use the CurrencyShares Canadian Dollar Trust (FXC, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro (USDCAD), minus ETF fee. The fund seeks to reflect the price of the Canadian Dollar with the shares representing a cost-effective investment relative to investing in the FOREX market.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com