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USD/CAD's Unwind Could Just Be Getting Started


With a long-term trendline broken and bears clearly back in control, the inflection point for the year has likely been seen.

Just under two weeks ago, we outlined a case for USD/CAD to challenge long held views and perform a bearish reversal. At the time, it was resting precariously on its 2018 trendline, although the trendline has since broken and bearish momentum is clearly winning the battle.

Trade tensions have continued to thaw ahead of next week’s G20 meeting, rising inflation has dispelled calls for a rate cut and the USD has been under immense pressure following the dovish FOMC meeting this week. Along with rising oil prices, the environment has been favourable for a stronger Canadian dollar, although signs were already there ahead of these moves that bullish pressure could be building for the Canadian dollar.  

Since that tweet, both AUD/CAD and NZD/CAD have fallen 2.3%, and the latter has broken to a fresh YTD low. Therefore, we remain bearish on USD/CAD as part of a longer-term reversal.


We can see on the weekly chart that the 2019 high has provided a lower high, ahead of its trendline break. That we’ve also seen the two most bearish weeks this year underscores how the tide has likely turned, following its low volatility rise into the 2019 high.


Switching to the daily chart shows a strong, bearish trend structure is developing.

  • Bears could seek to fade into rallies up to the 1.3225/50 resistance zone (as the reward to risk potential on the daily chart is currently undesirable shorts) or seek bearish continuation patterns on lower timeframes.
  • Next major support is around the 2019 lows where we’d expect a bout of profit taking (therefor a technical bounce), 1.3113 likely to provide interim support.  
  • A break above the resistance zone doesn’t invalidate the core bearish bias, we’d feel inclined to step aside until further signs of weakness appears whilst the bearish structure holds.
  • As our core view of bearish, we expect the 2019 low to eventually give way. So, hopefully it will provide further opportunity to short for some sizeable moves on the daily charts.


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