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.
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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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