The USD/CAD pair went back and forth during the course of the Monday trading session, but quite frankly I don’t see much in the way of bearish pressure. I think this is simply going to be a reaction to the psychologically significant 1.40 handle, and that the market is simply trying to build up enough momentum to continue to go higher. The breakout recently has been very strong, so we could be a bit overbought at this point in time.
The US dollar continues to be very strong overall, so at this point in time it’s only a matter of time before this market rallies every time it falls. On top of that, you have the massive bearish pressure in the oil markets which of course can’t seem to get out of their own way. That puts pressure on the Canadian dollar in turn, driving this pair much higher.
Buying Pullbacks, and Post 1.40
At this point in time I continue to buy pullbacks in this pair as I see there are several supportive areas just below. I believe the 1.38 level is supportive, just as the 1.37 level, the 1.36 level, and of course the 1.35 level which I now see as the essential “floor” in this market. I obviously would buy on a break out above the 1.40 level, but with this being Christmas week I think that it’s likely that we may see a bit of a lull in this market, as well as many of the other Forex markets out there.
However, with oil been so soft it’s almost impossible to imagine a scenario where this market falls for any real length of time, and when it falls I would suspect that most traders would look at it as simple value in the US dollar, which of course is the most favored currency at the moment right now. I believe that we are entering a multiyear uptrend.
