USD/CAD fell during the session on Monday, pulling back from the 1.09 handle. This area of course is going to be somewhat resistive simply based upon the fact that we have recently been so parabolic. After all, the market can go in one direction forever, and as a result it probably has gotten a bit on the heavy side. On top of that, the jobs number out of the United States of course has work against the value of the US dollar against many other currencies, although it must be said that the Canadian jobs numbers were more of a disappointment. On the other hand, we do have the oil markets working against the value the Canadian dollar, so there is a real chance of this pair continues to go much higher. In fact, that’s exactly what I expect as I still have a target of 1.10 in this market.
A lot of moving parts, and intertwined issues.
This market is a bit different than most other Forex markets, simply because the two economies are so intertwined. After all, the Canadians sell almost everything they export to the United States, and as a result the United States needs to be strong in order for candidate to be strong. On top of that, the Canadian dollar is tied to the oil market, and the oil markets of course have been a bitter disappointment lately. With that, I believe that the Canadian dollar still is going to be soft, and the 1.10 level might actually be a bit of an underachievement for this market.
Going forward, I will be buying this market on dips that show signs of support based upon short time frames. I think that the 1.0670 level will be significantly supportive, as it has been so significantly resistant in the past as we ground sideways between 1.06 and 1.0750 during the months of November and December. This market simply seems to be “retesting” the previous resistance, and therefore may continue to pull back for the next couple of sessions. On the other hand, if you are a bit more aggressive, you may be stuck trading short-term charts as the market had recently been so obvious in its breakout, one has to think there are a lot of traders out there licking their chops as they missed out.
