As I mentioned yesterday, the USD/CAD pair is trying to break out. During the Tuesday session though, we did in fact see that happen. Broke out and touch to the 1.13 level, an area that of course is a large, round, psychologically significant number. Any pullback at this point time should be a buying opportunity as far as I can see, and the 1.12 level below should be a supportive level. I believe that the 1.11 level is also supportive, and as a result I have no interest whatsoever in selling this market, especially considering that would mean shorting the US dollar which of course is the favored currency around the world by Forex traders.
The pullbacks going forward should be attractive to people to look at a pullback as potential value in the dollar, which I believe will be the continued way of this marketplace. Remember though, the two economies are very highly intertwined, so of course there is a good chance that we will go sideways from time to time before making impulsive moves, which should be the signal that we’re going to the 1.15 handle.
Oil markets certainly aren’t helping
The oil markets certainly are not helping the Canadian dollar, and as a result there’s very little reason to think that there’s any reason whatsoever for this market to pull back for any significant amount of time. The oil markets are testing significant support levels, and as a result it appears that the oil markets are about to fall apart. The gold markets are doing much for the Canadian dollar either, although they tend to be a little bit less influential as to the value of the currency.
I believe that the US dollar will continue to be strong, and although the Canadian dollar may get a little bit of a “knock on effect” from simply being a North American currency, the Canadian dollar won’t be able to trump the strengths of the US dollar. Quite frankly, if this pair pulls back, you may have an opportunity to buy the Canadian dollar against one of the weaker currencies, but certainly not in this pair.
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