By: DailyForex.com
The USD/CAD pair initially tried to rally during the Monday session, but as you can see it failed somewhere around the 0.9880 level. Because of this, it looks like continued weakness in this pair will be the order of the day, and as a result I do feel that eventually we will see the breakdown that so many people were waiting on.
As always, the oil markets will be a great influence on the value the Canadian dollar. For example, this chart is essentially the exact opposite of the Light Sweet Crude markets. The same can be said for the Brent markets as well. Both of these oil markets are on the verge of a breakout, and both formed hammers for the Monday session, which of course is simply the inverse of a shooting star like we have on the USD/CAD chart.
Breakout
The light sweet crude markets presently find themselves just underneath the $95.00 level. At that point time, it would represent a bit of a breakout and open the door to $100.00 in that market. At the same time, we should see the value of the Canadian dollar gained as more and more money flows into Canada looking for petroleum.
Alternately, the Brent market sees quite a bit of resistance between the $112.00 and the $113.00 levels. If we can break out above that, I think we can see the Canadian dollar rise in value as well.
The 0.98 level represents significant support in this market, and as a result if we can get below that level on a daily close I feel that we will fall the way down to the 0.95 handle with very little trouble. The move would of course represent a "risk on" type of environment, which is essentially what a lot of traders are starting to say in the blogosphere.
Alternately, I do not see an opportunity to buy this market right now, as the 0.99 and parity levels both should offer significant resistance. In fact, it really isn't until we get the 1.0050 that I feel comfortable enough to start buying.