[ProfileOou]

USD/CAD – There is a big squeeze on long CAD positions broadly this morning. USD/CAD has popped sharply higher from fresh cycle lows though the low 1.16s seen overnight but after yesterday’s even heavier sell-off, the short term picture for USD/CAD remains quite negative. The pop higher in funds is essentially retesting short and medium term technical break down points from the past few days, notable the 1.1764 January low point, which reverts to resistance – likely strong resistance – now. We think the rally gives the market an opportunity to short USD/CAD and keep risk manageable (above yesterday’s high). Yesterday’s session formed a bearish outside range lower and while this is an unusual place in the cycle to see such a formation, we think it underscores the weakness of USD price action at the moment. Above 1.1764, we see additional strong resistance at the 200-day MA, 1.1879.