The US dollar fell initially during the session on Thursday against the Canadian dollar, but the OPEC announcement came out today that the production cuts have been extended by 9 months. While this is something that the market had anticipated, I think that now the downtrend line that I have drawn on the hourly chart becomes much more important as this could have been a “sell on the news” type of event in the oil markets. A break above the 1.35 level probably send this market much higher, perhaps reaching towards the 1.36 handle. Alternately, if we get some type of exhaustive candle in that area, the market should continue to sell off. It will be interesting to see what happens next, but I think the next couple of sessions will be vital when it comes to the future of this currency pair.
Oil markets will be vital, because the production cuts are directly in line with what the market anticipated. They were not any more aggressive than originally thought, so I think that longer-term traders are going to look at this as a potential buying opportunity. However, I need to see a little bit of follow-through from the rally during the day to get involved. Longer-term, we have been in an uptrend, although the last several weeks have been a bit tough. For myself, I will probably stay out of this currency pair for at least 24 hours, if not 48. The moving averages are still negative, but I still think there is serious potential for the Canadian dollar to soften over the longer term. The 1.36 level above was important on longer-term charts, so I suspect that the longer-term traders may be waiting as well. Let the dust settle before putting money to work.
Written by FX Empire