USD/CAD risk reversals have shed CAD bearish bias

Omkar Godbole FXStreet Contributor

One-month 25 delta USD/CAD risk reversals (CAD1MRR), a gauge of puts to calls, is currently trading at 0.025 CAD puts vs 0.35 CAD puts seen on Dec. 31.

The slide from 0.35 to 0.025 represents a sharp drop in the implied volatility or demand for the CAD puts (bearish bets).

The data validates the USD/CAD's slide from 1.3662 to 1.31. As of writing, the pair is trading just above 1.31.

Risk reversals will likely turn negative in favor of the CAD calls (bullish bets) if the spot finds acceptance below 200-day moving average (MA) line, currently at 1.3080.

CAD1MRR

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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