The USD/CAD pair initially fell during the session on Wednesday, but as you can see bounced quite hard by the end of the day to test the 1.03 handle. This is predicated upon the statement coming out of the Federal Reserve meeting that suggested that the central bank will be out of the quantitative easing game by the middle of next year. This is a full year ahead of when people had anticipated, and as a result we saw the US dollar gained against just about everything on the planet at that point.
This does suggest however that the United States is seen a bit more growth and is perhaps strong enough to stand on its own, something that very few countries right now can stay. Moving at this point in time, I think that the Canadian economy will eventually benefit from that, but in the meantime, the US dollar should continue to reign supreme.
The 1.03 level above has been significant support previously, and as a result should be significant resistance. In fact, it was significant resistance twice before as you see on this chart. I think we can get above this area though, we will more than likely attempt to go as high as 1.04. Is above the 1.04 level that I think things get truly interesting. On the longer-term charts, you can make a strong argument for move up to at least 1.08, and possibly as high as 1.10 before the move is all said and done. Of course, there is the fact that eventually a strengthening US economy leads to a strengthening Canadian one, and therefore that will put a little bit of a lid on how high this market can move.
Nonetheless, I do feel that there is significant strength underneath, and for you short-term trader you may find value in buying short-term pullbacks at this point. I would wait for supportive candles so, and I would also expect the 1.02 level to be supportive as well. As for shorting, I have aptly no interest in doing so at this point time after the Wednesday candle printed.