The USD/CAD pair fell again during the day on Wednesday, continuing the downtrend that we’ve seen for some time. What further compounded this move was the fact that the Crude Oil Inventories number in the United States came out subtracting over 3 million barrels of oil. We had actually expected to see a little bit of a result, so this of course is a very bullish sign when it comes to the price of oil. Naturally, most currency traders initially started to buy the Canadian dollar, as it tends to be a bit of a proxy for the oil markets when it comes to the Forex trader.
Continue the downtrend
The pair looks as if it is continuing the downtrend, and that we are trying to break back towards the 1.25 handle now. On the chart, I have the 50 day exponential moving average, and you can see it has offered a bit of dynamic resistance, but then again so did the 1.30 level. This is a market that has been falling for some time, and had previously seen quite a bit of support at the 1.30 level, which should now be resistance. Because of this, I feel that it makes perfect sense that we fall from here. On top of that, I believe that it’s not until we break above the 1.30 level that the trend has changed to the upside completely.
I don’t think this pair is going to break down massively, I think that were going to grind our way towards the 1.25 level over the next several sessions. With that, I don’t have any interest in buying until we get above the aforementioned 1.30 handle, something that doesn’t look so likely now. I think short-term rallies will continue to offer selling opportunities as well, and that this market should continue to favor the Loonie.
