The USD/CAD pair had a very strong session on Tuesday, breaking well above the 1.32 level and closing towards the top of the range for the day. With this, we ended up closer to the 1.33 handle then the 1.32 level, so it looks as if the bullishness should continue. I don’t see any reason why this won’t happen, because quite frankly oil markets look like they are about to fall apart. If that’s the case, the Canadian dollar will continue to be pummeled.
Remember, this is a market that has been in an uptrend for some time, and even though we had a fairly significant pullback recently, the bottom of the support range that I had pointed out has helped. If you remember, I had suggested that the 1.30 level is the beginning of a massive support level that extended only down to the 1.28 handle. This was based upon previous resistance and of course the fact that the 1.30 level offered so much in the way of resistance during the financial crisis.
Buying dips
I am more than willing to buy dips in this pair, especially today as the FOMC Statement comes out. Any selloff in the US dollar should offer value in this market, although you may have to sit through a significant amount of volatility during that time. I think pullbacks before then should also be thought of as buying opportunities as well, as I think the market has already made up its mind anyway. The only thing that can really throw a monkey wrench into this particular move is if for some reason the Federal Reserve added more stimulus. If they did, all bets would be off as it would totally shock the markets without a doubt.
Going forward, I fully anticipate hitting the 1.34 level and eventually the 1.35 handle after that. I actually think we’re going higher than that, this is a longer-term move but this pair does tend to be very choppy overall and it will take some time.
