USD/CAD sellers pounce after squeeze higher

USD/CAD sellers pounce after squeeze higher

USD/CAD has leveled out at 1.2550 but is easily the strongest G10 currency on the day, down 120 pips to 1.2554.

The pop on Monday looks like a short squeeze, in part because it exceeded the moves in other commodity currencies. Why? Because there was a large net-long CAD position to be squeezed in the CFTC data.

Along with that, we've had a dump in oil followed by a bounce. It will need to rally another $1.50 to get all the way back to where it was on Friday but it made some great headway today, up $3.01.

Like many other charts, USD/CAD is now at an important inflection point -- in this case the trendline from the June lows.

Tomorrow and the next few days are pivotal. I expect the next move will be a lasting one.