USD/CAD hasn't exactly been the most exciting pair to trade lately. This is because the pair has been very sideways, which it does tend to do quite often. However, there are sudden bursts in this pair wants to decide which way it wants to go, and I think that we are perhaps witnessing the windup for that move.
The pair is currently forming what I think is a little bit of a base between the 0.99 level and the 0.98 level. I see the 0.98 level as a massive supportive area based upon longer-term charts going back well over a year. In fact, it looks like the bottom of the consolidation area that extends all the way to 1.04 level. Because of this, I believe that the risk to reward ratio is more than enough in my favor on a long trade in order to place one.
0.9950
The 0.9950 level looks to me to be a bit resistive, and once we get above that I feel that we should continue to march northward until we get to the 1.04 level. Granted, there will be a lot of noise between here and there, most certainly at the parity level - but I think over time we simply will continue to bounce around in this huge rectangle.
However, as with all trade setups you have to have a contingency plan of sorts. Mine is that if we break below the 0.98 level on a daily close I am more than willing to start selling. If this happens, I suspect that we will more than likely had down towards the 0.95 level in relatively short order. Below there, I suspect we go much, much lower.
Obviously, the oil markets will have an effect on the value of the Canadian dollar going forward, but overall I believe that the "risk off" trade is a much larger threat to the Canadian dollar. Because of this, I would not be surprised see this market bounce for a while, although I suspect the getting above 1.04 is a bit of a stretch of the imagination.