Four days of selling in USD/CAD finally relents in bounce to 1.2280
WTI crude oil is trading at $60.60 after touching as high as $61.82 a few hours ago and that's been the queue for USD/CAD buyers.
The pair has been in a downtrend since a blockbuster Canadian employment report on Friday. It's been aided by rising oil prices and general US dollar selling as Treasury spreads are squeezed.
The Canadian calendar is light for the rest of the week so the drivers will be US data and oil. The turnaround in oil today suggests the $58-62 range remains intact and prices might chop back down to the lower end and that will boost USD/CAD.
Technical analysis:
In the big picture, the uptrend is still well-intact. The selling in May took the pair to the 38.2% retracement of the ytd gains. That said, I suspect the US dollar will need some kind of catalyst (ahem, Fed) to get it moving back to the upside.
Today's low near 1.2200 is a psychological level but it was also the April 30 high.
Overall, the upside remains the better trade and the four-day dip offers a better entry level but unless the bond market settles down, there isn't any urgency to buy.
