The USD/CAD pair went back and forth on Friday as we continue to grind just above the 1.37 handle. This is a market that should face what’s going on in the oil markets, which look to be a mess now. We’re the top of the channel, so a pullback isn’t necessarily the most surprising thing in the world that could happen. If we do get a pull back, I think that we will probably go looking to lower levels. Perhaps down to the 1.35 level, followed by the 1.3250 level. Alternately, if we can break above the top of the channel, extensively the 1.38 handle, the market will then go looking for the 1.40 level above there. You will have to pay attention to the oil markets in general, as they have such an influence on the Canadian dollar itself.
The USD/CAD pair will be choppy going forward, but having said that I think that it’s more than oil that’s in play right now. The housing market in Canada is starting to become a very precarious thing, and I think that there is a lot of underlying fear when it comes to this issue, as memories of the US housing crisis should be fresh in the memory of traders. I believe that the markets should continue to be volatile, but I think longer-term the overall uptrend in channel should continue to push to the upside, offering longer-term and steady traders the ability to profit if they can be patient enough to take advantage of what should be a slow grind towards the 1.40 level above. Until then, look for pullbacks offer value if you get the opportunity as the US dollar continues to be the favored North American currency going forward.
Written by FX Empire