The USD/CAD pair rallied during the session on Monday, to continue the move above the 1.06 handle. Now that we are comfortably above that level, I feel that this market has carte blanche to continue all the way to the 1.10 handle without too many issues. That being the case, if we manage to pull back and find support at the 1.06 handle, I believe that will be a perfect buying opportunity in a market that should be finding support where once saw resistance.
On top of that, I see the hammer from last week that is parked at the 1.06 handle as being the "floor" in this marketplace. Essentially, and to we break down below that hammer I see no chance of selling this market as it has been so strong. After all, the Canadian dollar has been on the back foot for some time, so this is just simply an extension of that move.
Nonfarm payroll.
Most people don't understand this, but the nonfarm payroll numbers have a massive effect on this currency pair. In fact, this is a great way to play that announcement, as the two economies are so interconnected. You have to understand right now that a lot of people were concerned about whether or not the Federal Reserve can taper off of quantitative easing based upon employment numbers. If we get strong employment numbers out United States, you can expect this pair to go much higher.
Also, don't forget the oil markets as they can greatly influence where this pair goes as well. Right now, it appears that the oil markets are very soft and this should be negative for the Canadian dollar overall. Because of this, I believe that this market continues higher in this area because of the fact that the fundamentals line up for a weaker Canadian dollar, while there seems to be nothing but air above current levels. With that being said, I am going long this pair now, and fully expect to pick up four handles.
