After a parabolic rally (sell-off in the Canadian dollar) to begin the year, the USD/CAD has been working on putting in a top for the past couple of months:
The key level to watch here is 1.2380 – a daily close below 1.2380 would hold major significance and I will venture to state that a weekly close below 1.2380 would complete the topping process and target a return to the big round number psychological level at 1.20.
Sentiment on the Canadian dollar is also extremely poor which helps to support the idea that the USD/CAD is in the midst of a topping process that could be put in place very soon:
