The USD/CAD pair fell during the session on Tuesday, breaking below the 1.35 level again. The oil markets have seen a significant amount of buying pressure, and with the OPEC meeting coming later this week, this pair could come into focus. Not only that, but we have a Bank of Canada interest rate announcement and statement coming out today. There are a lot of reasons to think this pair will be very active over the next couple of sessions. Currently, looks as if the sellers are very much in control, but a few choice words out of Canada could change everything immediately. Having said that, I do have the inclination of bearish attitude more than anything else due to the recent roll over from the important 1.36 handle above. Once we break down below there, we had cleared a significant support barrier. That was an area that breaking above was a bullish sign in the past, and now it’s possible we could see this pair pullback significantly.
The pair is very likely to be unstable over the next several sessions, because quite frankly there are too many moving pieces. Ultimately, it’s probably best to trade in smaller than usual increments, at least until we get through the rest of the week. If we do continue to go lower, I would suspect that the 1.34 level underneath is the target that we will next go aiming for. Alternately, if we can break above the 1.36 level over the next couple of sessions, that would solidify the longer-term uptrend. Having said that, it seems very unlikely that the buyers are going to be aggressive in the short term. Again though, it would only take a few words out of on a wide to change the situation for the Canadian dollar as there are a lot of concerns about the housing market.
Written by FX Empire