The USD/CAD pair fell during the totality of the session on Tuesday, but found the 1.12 level to be supportive enough to turn things back around and bring buyers into the marketplace. With that being the case, it appears that the round number of course still offers plenty of support, but I think that there is even more support below the 1.12 handle. In other words, even if we break down below that area I think that we should see plenty of buying pressure below to keep this market somewhat afloat.
The next major support level I see is the 1.11 handle, an area where buyers have stepped in previously. Below there, we have the 1.10 level, which of course is a large, round, psychologically significant number. We have been in an uptrend for some time now, and I don’t really see that changing anytime soon.
Oil market still looks a bit dodgy
The oil markets don’t necessarily look like they are ready to take off to the upside with any significant power, and that of course could keep the value of the Canadian dollar low. I think that ultimately the US dollar continues to strengthen given enough time, especially considering that the Americans have what is probably the strongest major economy at the moment. It’s not exactly something to write home about, but the US economy has outperformed most of the other major ones at this point in time.
Ultimately, the 1.15 level should be the next longer-term target, and they do believe that we will hit that level sometime between now and the end of the year. However, this pair has a long history of been very choppy and I don’t see that changing anytime soon either. After all, the two economies are highly intertwined and that of course makes for a lot of back and forth and noise in not only the currency markets, but the economic announcements as well. I am buying on the dips, and continue to hold a long position in this marketplace from under the 1.10 handle.
