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USDCAD’s sharp turnaround has put crucial support in view. Thus far, the pair has held the 1.3850/70 area. This is the third time it has been tested as part of a broader descending triangle since the March highs, but analysts at TD Securities do not see reasons for the loonie’s appreciation.

Key quotes

“A break below this support would be bearish for the pair, particularly if confirmed with DMA crossovers that would expose 1.3766. Meanwhile, a move through 1.4050/80 daily downtrend resistance will open topside extension.”

“We see no clear catalyst for a downside breakout, and we remain committed USD bulls. The vol premium for USDs has eased but not eroded suggesting some shyness to fully bet against the USD.”

“We rather think that a lot of good news is already in CAD’s price. Positioning is skewed short, but we think these are strategic in nature. Meanwhile, a broad USD pullback appears well advanced on our measure.”