The USD/CAD pair had an interesting day of the originally gain in value, only to turn around once the Federal Reserve minutes were released. It appears that several of the members on the board of the Federal Reserve are more than willing to ease monetary policy in the United States economy doesn't pick up. While the parameters are still a bit on the big side, this had enough traders out there looking for QE3.
By the time the day ended, we solve the gains on giving back and the pair formed a shooting star. This is very interesting, as it shows that although the Tuesday hammer triggered buy orders, the end of the day on Wednesday completely reverse the sentiment and it appears that we are currently "stuck."
It seems as if the market has found an area that it's comfortable at in the form of the 0.99 handle. This area is only a minor form of support, and as such I don't believe that will last too long. However, in the short term we would have to expect some type of consolidation. Typically when you get a shooting star and a hammer back to back or vice versa, this means that the market is somewhat confused.
Confusion
When markets are confused like this, it is best that you leave them alone. One of the biggest problems with this market right now is that the Canadian retail sales numbers were so poor during the beginning of the Wednesday session, then it may have hurt the Canadian dollar overall. However, it has to be said that there are plenty of catalysts in the Middle East to keep driving the price of oil higher, which of course will drive the price of the Canadian dollar higher as well.
Looking at this pair, selling rallies may be the way to go, but we need to see a break higher to begin with. For example, a resistive candle somewhere near parity would be just about ideal. Also, it has to be said that we break the bottom of the hammer from Tuesday it would show a significant corrosion of support. This would have me selling as well, aiming for the 0.97 handle.