USD/CAD has nearly recovered last Friday’s drop
Gaps and big, straight-line moves are the most-interesting technical formations. They’re usually the intersection of technical analysis and news.
In this case, it was an extremely strong Canadian jobs report. The thinking at the time was that it would lead to a BOC hike, or at least a hawkish BOC. Yesterday we got neither and USD/CAD retraced.
That’s when the technicals kick in. We’ve climbed over the 61.8% retracement and now there is no significant resistance standing in the way of a complete retracement up close to 1.29. That’s where the double-top of Oct/Nov highs is.
The trade then becomes waiting for a break and a potential rally up to 1.31.
In the meantime, we turn an eye back to fundamentals with the US jobs report due tomorrow, the FOMC next week, NAFTA and the tax bill details.