USD/CAD retreats after test of 1.2400 as uneasy truce continues

Technical Analysis

Higher highs in this pair despite cycle highs in oil

This is an interesting week for USD/CAD. The Bank of Canada decision is Wednesday and it will include a taper but could also include a more-hawkish message or a pushback against a market pricing in four hikes next year.

USD/CAD has been stubbornly strong in the past week. After briefly falling below 1.23 last week, it’s been chopping higher despite new cycle highs in oil and renewed strength in natural gas today.

Perhaps that’s just the ebb of the market and broad USD strength but it’s not a great sign for USD/CAD sellers. On the flipside, the pair has repeatedly struggled around 1.2400.

Maybe the BOC resolves that deadlock or oil comes off after nine weeks of gains. Either way, the sideways move since Oct 15 won’t last much longer.

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