The USD/CAD pair rose of course during the session on Monday, breaking back above the 1.10 level, an area that has been resistive in the past. In fact, it has been very resistive over the last couple of months, and any time we break above this area I am very interested in buying. I think that pullbacks to the 1.10 level should offer support, and therefore supportive candle is reason enough for me to start buying. On top of that, the Canadian Core Retail Sales month over month number comes out today, and that of course can have an effect on the value the Canadian dollar in general.
If that number is weaker than anticipated, which is supposed to be -0.1%, we are more than likely going to see this pair continued to climb given enough time. In fact, I think that the market would go to the 1.11 handle, and then the 1.12 level after that. The 1.12 level above is massively resistive as far as I can tell, but I do think that that area will be challenged given enough time.
Trend line.
There is a significant trend line from the beginning of July, and I think that this will continue to push the market higher. The candle for the Monday session has been very strong, and as a result the fact that we close the very top of the candle tells me that the market probably prefers to go higher anyway. I think that a short-term pullback to the 1.10 level will more than likely happen, but a supportive candle is more than enough of a reason for me to start buying again.
The oil markets haven’t been exactly been supportive of a strong Canadian dollar, so I think that there really isn’t going to be much in the way of external forces to help. The US dollar continues to be favored by currency traders around the world anyway, and although the Canadian economy is highly leveraged to the US economy, at the end of the day the greenback should continue to strengthen overall, and this market won’t be a different.
