At the end of last week, I made the case for Canadian dollar gains, and I spoke about that on BNNBloomberg on Monday as well. It's been a great week for that trade, with the loonie up every day.

I would be cautious here. A close below 1.2500 would be the lowest this year but there's a cluster of support in the USD/CAD chart nearby and it's oversold on any short-term metric with the daily RSI at 36.

I would much rather sell at 1.2600-1.2650 then chase this move further. Shorts would be wise to take a bit off the table.

USDCAD daily chart

In the bigger picture, something that falls for 9 straight days is falling for a reason. Canada is loaded with commodities and it's a commodity bull market. The loonie isn't even close to pricing in $110 oil and $5 gas plus the multitude of other commodities that are sizzling.

As I wrote in the above article, I think the Bank of Canada surprising with a 50 bps hike on April 13 is the catalyst for the next leg of loonie strength.