USD/CAD bounced sharply and continued to rise after the beginning of the American session supported by a recovery-rally of the US dollar across the board. US stocks also bounced to the upside while US bond erased gains supporting the greenback.
The pair reached 1.2549, the highest level since last Thursday, completing a 100-pip rebound from the lows. Similar price action moves were seen yesterday but now, USD/CAD broke above 1.2530/35, making a higher high.
At the moment it trades at 1.2540, keeping a bullish tone, despite the recovery in crude oil prices that trimmed losses.The correlation between the loonie and crude oil weakened during August.
Double bottom at 1.2440/45?
The pair today bottomed at 1.2440, the lowest in four weeks and less than five pips below Monday’s low. The chart shows a potential double bottom pattern around 1.2440, reinforced by the breakout and consolidation above 1.2510/30 that was a key resistance. The target of the formation is seen near 1.2600 that is also the next strong resistance.
A decline back below 1.2510 would remove momentum out of the US dollar. Support