By Justin McQueen

LONDON, Oct 5 - USD/CAD has swung from one extreme to the other since September, with RSI moving from oversold territory to firmly overbought. Spot is now trading around levels last seen in April 2025, although repeated failures to break cleanly through the year-to-date high at 1.4248 suggest that topside momentum may be starting to lose traction.

That said, the RSI being overbought is not in itself a compelling reason to fade the move. USD/CAD has shown a tendency in recent months to trend further and for longer than expected, leaving short-term counter-trend positions vulnerable. Historically, when RSI first breaks above 78 — which occurred last week — spot has generally continued to grind higher over the following 5–10 sessions.

However, in the medium term, the signal is more constructive for CAD. Over a 60-day period, USD/CAD has more consistently pulled back after entering this degree of overbought territory, with the main exceptions occurring during recessionary periods, notably in 1998 and 2008. In short, the near-term bias remains for a possible further squeeze higher, but the risk-reward for chasing topside looks increasingly less attractive, particularly if spot fails to sustain breaks above 1.4248.
CAD RSI signals

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))