USDCAD: 290-Pip Reversal Underway?

USDCAD has spent the better part of 2019 moving sideways.

However, the price action in early March saw buyers take advantage of what appears to be a bottoming pattern.

The inverse head and shoulders below could be indicative of a move higher.

You can see how buyers defended new support at 1.3290 during yesterday’s session.

And USDCAD bulls are off to a fast start once again today.

My only concern here is the U.S. dollar.

I’ve been relatively vocal about the potential for a EURUSD rally later this year.

And that means a weaker USD at some point.

Click here to get access to the same New York close (5 pm EST) Forex charts I use.

If your charts don’t use a 5 pm EST close for each 24-hour session, you’re exposing yourself to false signals.

But that could happen later this month or two months from now, so it may not be an immediate headwind for a USDCAD advance.

Not to mention the fact that I could be wrong about a weaker USD later this year.

Furthermore, the USDCAD is tied to the Canadian dollar which has seen more favorable movement than the U.S. dollar so far this year.

In fact, I just wrote about CADJPY yesterday.

The 83.80 resistance area on the CADJPY has already triggered a 60-pip selloff.

That Canadian dollar weakness is single-handedly propping up USDCAD considering the USD’s relatively unchanged status so far in today’s session.

As long as this 1.3280 support area on USDCAD holds on a daily closing basis, I will be looking for additional gains going into next week.

If this is indeed an inverse head and shoulders pattern, the 280-pip objective comes in at 1.3600.

That’s relatively close to the year-to-date high of 1.3662.

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