The USD/CAD pair fell during the session on Friday, in reaction to the nonfarm payroll numbers coming out less than strong. This had traders out there thinking that the Federal Reserve may in fact hesitate on tapering off of quantitative easing. This of course will have a large effect on the US dollar, as well as the commodity markets. Obviously, another thing that we need to look at is the Canadian employment situation which came out on Friday. While it was weak, it was certainly stronger than the US employment situation, so it makes sense that the Canadian dollar gained on the US dollar.
We fell all the way down to the 1.04 level, which of course has been rather supportive lately. This area has both been supportive and resistive, so it is a simple matter of been an area of attraction for traders in general. The fact that we could not close below that handle does catch my interest though, as well as the uptrend line that you see on the chart just below it. Because of this, I am actually not willing to sell this pair, and believe that we will eventually see some type of support coming into this market.
Being patient should pay dividends
Being patient in this market should pay dividends. I believe that if you are patient enough to wait and find a supportive candle in this general vicinity, you should get a nice trading signal that could continue the uptrend that we've seen for most of the summer. That being the case, I think that the market will eventually try to reach the 1.06 handle, which to me is a significant resistance area. If we can get above that area, this market could really start to breakout to the upside, and we could reach as high as the 1.10 handle over the course of the longer-term.
I also believe that the reason this market could push higher is that the Federal Reserve does in fact finally taper off of quantitative easing. Unfortunately, that leaves a lot of "buts" and “ifs” out there.
