The USD/CAD pair broke higher during the course of the session on Wednesday, showing real strength after the Bank of Canada announced a surprise rate cut. Because of this, the US dollar climbed rapidly against the Canadian dollar, which of course lost strength overall during the session due to this surprise. Ultimately though, it makes sense of this pair goes higher based upon the fact that the oil markets are very soft, and the US economy is by far the strongest one out there.
This candle of course looks very strong and as a result I believe this market will continue to go higher. Pullbacks at this point time should continue to offer buying opportunities as the US dollar continues to strengthen in general. The US Dollar Index looks very strong as well, so it seems like this is going to continue to be the case going forward.
Long-term uptrend
I believe that we are in a long-term uptrend now, as the US dollar continues to strengthen against almost everything. The Canadian dollar itself isn’t necessarily in bad shape, but it will continue to be soft against the US dollar as all other currencies will be. The Canadian dollar itself is in the selling it recently us everything, but in this particular market makes sense that we continue to go higher.
With that being said, I like the way this candle looks as it is a large, suggesting an impulsive type of move. That’s what this pair does, grind sideways for long periods of time and then just impulsively moves in one direction or the other. I think that we are heading to the 1.25 level next, and that pullbacks along the way will simply entice more and more buyers to get involved.
I also believe that the 1.20 level should now be support, and that support should extend all the way down to the 1.18 handle. That’s essentially support “zone”, and therefore I find it very difficult to imagine this pair breaking down below that area. I am essentially long only at this point.
