FXStreet (Delhi) – Research Team at RBC Capital Markets, suggests that they look for USD/CAD to make new highs in 2016, but for the first time in four years, they are net long CAD in their trade recommendations, expressed through CAD crosses (short EUR/CAD and short AUD/CAD, only partly offset by short CAD/MXN). Key Quotes “We look for EUR/CAD to end Q4 2015 at 1.42 and decline to 1.36 in Q4 2016. It is a trade of two halves, driven mainly by EUR weakness in H1 2016 on the back of frontloaded ECB stimulus and slow prospects for Euro area economic recovery, coupled with the prospect of further central bank reserve liquidation which should hit EUR disproportionately. We look for CAD recovery as the primary driver in H2 2016, as a stabilization in energy prices and ongoing recovery in the non-energy sectors, leads to a pick-up in domestic economic growth. That should mean the BoC is ready to reverse the 2015 emergency rate cuts by the end of next year.” “The technical backdrop for EUR/CAD corroborates this outlook after a series of bearish trend reversals below 1.4775 and 1.4444 in October amplified a double top that had formed against the 2014-2015 highs near 1.5586.” “These trend reversals are expected to sustain downside price momentum, with resistance at 1.4388 and 1.4623 anticipated to attract selling interest for a test of initial support at 1.3993 (61.8% Fibonacci retracement of the April-August rally). A daily close below this level would then clear the way for an extension to an area of congestion defined by the March high at 1.3766, followed by 1.3623 (76.4% retracement). Given our bearish view, we recommend scaling in to short positions against 1.4375 and 1.4600 (50% of position at each level), with a take profit at 1.3800 and a stop above 1.4720.” For more information, read our latest forex news.