USD/CAD Daily Outlook - July 1, 2013

The USD/CAD pair had a slightly positive session on Friday, when you look at the overall motion of the market, it makes sense that we are struggling a little bit this area. After all, there was a shooting star that formed at the 1.0550 handle, and we have had a fairly parabolic move from the 1.0150 handle as well.

This coming week is going to be interesting for this pair, because both of these countries will be releasing their economic numbers involving employment. In fact, they release at the same time on Friday morning in North America, so that we really could see a lot of volatility. Between now and then, it will be interesting to see how things play out, but I personally believe that the oil markets will be one of the biggest drivers.

Speaking of the oil markets, they did form a shooting star on Friday, which suggests that the Canadian dollar will fall in value as well. If that happens, a break above the 1.0550 level signals to me that the market is probably heading to the 1.08 handle first, and then possibly even as high as the 1.10 level.

USD/CAD Chart July 1

One-way trade, for now.

I have absolutely no interest in shorting this pair simply because of the strength of the move recently. In fact, I feel that as long as we can stay above the 1.04 level, the buyers will be accumulating in this area and looking to push the market higher. It really isn't until we get below the 1.03 handle that I feel enough support has been broken down to consider shorting this pair. Also, you have to keep an eye on the oil markets at the same time. If the West Texas intermediate markets get above the $100.00 handle, at that point in time I would fully expect this pair to reach down and possibly even make a run back towards parity. Obviously, the employment numbers will have a massive effect on this pair as well, so it could keep this in a little bit of a holding pattern between now and Friday.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.