USD/CAD had a fairly bearish session on Wednesday as the oil markets got a much needed pop and bounce from support levels. The oil markets have been telling us of a global slowdown for a while and this bounce will more than likely be a simple matter of an oversold market calming down for the short-term.
Also, there is a possibility that the Federal Reserve Chairman will mention something about easing in front of Congress today. This is essentially what many of the bulls are hanging their hats on, and the move on Wednesday will have been partially because of this, and the fact that a lot of longs didn’t want to still be long in the market as the Congressional testimony approached. In situations like this, it is common for a single sentence of the Chairman’s testimony to more the markets massively. In that scenario, it is much easier to be flat than to worry about what he says next.
End of the day and 1.03
The 1.03 level (area) has held as support as I write this, and so far looks like it might be able to at least slow down the fall in this pair. The oil markets produced a positive day on Wednesday, but also a shooting star. If they fall – this pair rises. However, the real intentions of the market won’t be known until the end of today’s session after we get through the possible shocks that Mr. Bernanke can produce.
The market will be pushed and pulled in the meantime, and the period during the testimony will be especially erratic. However, there comes a point sooner or later when the Chairman will say something that finally moves the market. Because of this, I am going to be watching his testimony but won’t bother acting until the end of the day as I know fake outs are common as well. I want to see what the end of the day looks like before playing a new position. I like the uptrend at the moment, but everything will change later today – based upon one man’s words. If we suddenly fall sharply, I will be forced to sell as it will more than likely be a reaction to more easing coming down the road.