By: Mike Kulej
Unlike many other currency pairs, the USD-CAD has spent most of this year in a relatively tight trading range. The spread between the high and the is only about 770 pips, not much given the time scale involved and comparing what other instruments did. This could change soon.
After oscillating between roughly 1.0700 and 0.9930, the USD-CAD is again approaching the lower end of this range. Given the recent explosion in other commodity currencies, the Australian Dollar and the New Zealand Dollar, we can expect this recent support to be tested soon.
Breaking of the 0.9930 level would open the way for the USD-CAD to make another major move down. There is a minor support at 0.9650, but the main objective will be the all time low of 0.9060 set in late 2007. Some technical indicators on the weekly chart confirm likely trend acceleration, if the support gives way.
The MACD remains very close to the zero line, a reading it often shows before important market swings. Even the more sensitive Stochastic Oscillator is right in the middle of its scale. At these values, they do not indicate possible market direction, only that the USD-CAD is ready for a larger move. The price action itself will decide the direction, and the 0.9930 support is the key.
