The USD/CAD pair rose during the course of the session on Tuesday, slamming into the 1.12 level during the day. We did close just above there, but we slammed and sliced enough for me to be comfortable thinking that this market will in fact break out to the upside. Because of this, I think that the Canadian dollar will remain relatively weak at the moment, and with that it’s only a matter of time before reach the 1.15 level. Besides, the US dollar of course is the most favored currency out there right now, and as a result I am not interested in shorting it against much. This is especially true when it comes to the Canadian dollar which is getting absolutely no help from the oil markets.
Ultimately, I believe that the Canadian dollar will continue to feel pressure as although the US economy is doing better, it is not been passed along to Canada in general. Not that the Canadian economy is in bad shape, it’s just not as strong as the American economy. I believe that the Canadian dollar will strengthen against most other currencies, but the US dollar of course is going to be different than most other currencies.
Fairly parabolic, but plenty of strength underneath
The market move recently has been fairly parabolic, but it does look as if there is still plenty of strength below. I believe that a break above the top of the range from the session on Tuesday is reason enough to start going long, but I also believe that pullbacks going forward show signs of support, especially near the 1.11 level will be cause for buying. The 1.10 level below is also going to be supportive, so it really comes down to whether or not we get the right supportive candle. It’s just a matter of being patient enough to wait for that signal in order to get a decent entry point. I do not see a scenario in which a start selling this pair anytime soon, so quite frankly I’m not even looking for it.
