The USD/CAD pair initially fell slightly during the day on Wednesday, but then broke above the 1.35 handle. The market looks as if it is trying to break out again though, so if we can make a fresh, new high, especially above the 1.3530 level, the market should continue to see buying opportunities. Oil markets are falling, and that of course is very negative for the Canadian dollar, sending this pair higher. The fact that we have finally made this move after several sessions tells me that given enough time, we should continue to see buyers enter this market. On top of that, I would have no interest in shorting this market until we break down below the 1.34 handle, something that I don’t know that will happen. Once we break out to the upside, there will be a serious fight on our hands at the 1.36 handle, which previously had been massive resistance. If oil continues to fall, it’s very likely that we continue to go much higher than that.
OPEC losing control
The production cuts coming out of OPEC seem to have very little effect on the marketplace, and with this being the case I believe that the US dollar does have a bright future against the Canadian dollar, especially if a lot of the oil being produced is coming out of the United States. This is a bit of a “double whammy” as far as the commodity is concerned, so therefore it’s likely that the pair has much more interest in going higher than lower. However, if we were to break down from here I think the market could go as low as the 1.30 level, although this is a very unlikely in my estimation, especially considering we have recently broken out above the 1.35 level that has been so resistant over the last 5 sessions.
Written by FX Empire