USD/CAD fell during the session on Thursday to continue the remarkable downward pressure that this market has seen over the last several sessions. Remember, we have broken the bottom of a downtrend channel, and this suggests that momentum is certainly picking up for the sellers in this market.
This of course will be predicated upon moves in the light sweet crude market, as oil is a major driver for the Canadian dollar. As oil prices rise, this pair typically falls. It appears that the $95 level in the light sweet crude markets is currently trying to provide some type or resistance, but if that gives way this pair should accelerate to the downside as well.
0.99 And 0.97
Currently, we are hovering above the 0.99 support level, and I see this as a minor area although there should be some type of response. Any bounce at this point in time it should be a nice opportunity to sell this pair as rallies are to be faded in the long run. Truthfully, as far as buying this pair is concerned it will be difficult to do until we get above the previous downtrend channel.
Once we get through the noise that we are currently awaiting through, I believe that we will head to the 0.97 level which could be a turning point in this marketplace. It will either be a massively supportive area again, were will be the opening of the floodgates to much lower prices. It's hard to tell at this point in time, but truth be known this pair has been in a pretty severe downtrend for several years now with the exception of during the financial crisis in 2008.
As long as the oil markets can sustain themselves in a relatively bullish manner, this pair shouldn't have too many troubles getting lower. Of course, if there are any financial jewels to the system, this pair will rise in the end. However, we think that any move like that will more than likely be an opportunity to start selling again as the markets have become correlated based solely upon risk appetite these days.