USD/CAD is an interesting pair in my opinion. It can be a play on oil prices, the US jobs market, and even gold at times. The pair is currently retracing from a fairly strong move higher, and because of this we have to ask a lot of questions about this pair.
The 1.04 level above has been the top for some time, and it has kept prices lower yet again. However, there are issues in the oil markets, and this will help keep the value of the Canadian dollar down. The market will be a measure of the US jobs number as well, as the Canadian send 80% or more of their exports into the United States. Simply put, if the Americans aren’t working – they aren’t buying Canadian goods.
The pattern of the price action lately has looked somewhat bearish, and almost like a head and shoulders. This has me thinking that this pair wants to continue to fall, but there are a lot of things that will come into play before we can make any distinctions about whether or not it should be sold.
1.02, 1.00, 0.98, and beyond….
The pair has several support levels below, and it looks as if any fall will be a struggle and grind lower. This would be typical of this pair as the two countries are so intertwined economically. The value of oil has to be watched at the same time when trading this pair, and it should be said that oil looks like it is sitting on a supportive area and looks ready to bounce. However, this is the problem: I think it will only be a bounce, and not a serious move. The reason for this is in the DNA of the Canadian dollar and the risk appetite correlation.
.png "USD/CAD Daily 61812")
The next move for me is to see if 1.02 gives way as support. In fact, we could very easily gap below it at the open on Monday. If that is the case, I am looking to sell at this point and perhaps take profits at the parity level, as I see the next major support area in that neighborhood.