Market Spotlight: USDCAD Double Bottom

market-spotlight:-usdcad-double-bottom

USDCAD Reversal on Watch The combination of lower oil prices this week and fresh hawkishness from the Fed has fuelled a sharp reversal in USDACD. The pair has seen strong reversal candles off the 1.2469 support, potentially carving out a large double bottom at the level, accompanied by strong bullish divergence in momentum studies. With retail positioning coming down from an extended long position, conditions are growing favourable for a fuller reversal higher. Look for a break of the 1.2648 area, targeting a move up to 1.2814 initially.Keep An Eye OnThe current dynamic of weaker oil prices and a stronger USD are very favourable for bullish USDCAD views. Looking ahead, the key focus will be on incoming US data as well as broader risk flows. If oil prices remain pressured across next week this should certainly pave the way for a decent move higher in the pair. Looking ahead next week, key focus will be on US CPI followed by the BOC rate decision mid-week.

Source: Tickmill

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