USDCAD | Technical Rebound or Final Stop Before the Crash?

USDCAD is currently in a highly delicate phase: the price has reached a key weekly demand zone between 1.3720–1.3820, which overlaps with a strong Fibonacci retracement cluster (0.705–0.78) of the previous bullish leg. So far, the reaction has been muted, but price compression and fading volatility suggest a potential short-term rebound.

However, looking at the bigger picture, the macro and positioning signals are flashing red for the US dollar:

📊 COT Report: Non-Commercials are significantly increasing short positions on USD and reducing shorts on CAD → bearish bias on USDCAD
🧠 Retail sentiment: Most retail traders are long on USDCAD → contrarian bearish bias
🗓️ Seasonality: May is historically negative for the USD and positive for the CAD → further confirms the short thesis
Only a structural recovery above 1.4150 on the weekly close would invalidate the bearish setup. Until then, any retracement towards 1.3980–1.4050 should be seen as an opportunity to sell strength.

🎯 Key Levels:

Sell zone: 1.3980–1.4050
Invalidation: Weekly close > 1.4150
Targets: 1.3720 – 1.3550
🔔 Critical note: When everyone is long, often the only direction left is down.