The USD/CAD pair went sideways initially during the course of the session on Wednesday, as the world awaited the FOMC statement. We are hovering just above the 1.25 handle, and that of course is a very important level. If we can break down below there, the market will probably go looking for the 1.24 handle below, which coincides nicely with an uptrend line on the daily chart. Alternately, if we can break above the 1.26 level, it’s likely that the market will continue to reach higher. A lot of this will be influenced by not only the Federal Reserve, but oil markets as well. Oil markets continue to be volatile and positive, so it makes sense that the market will probably breakdown.
Currently, I believe in selling short-term rallies. I think that the markets will offer the Canadian dollar a bit cheaper from time to time, especially if the oil markets make a small dip. I think once oil reaches the $50 level, that being the WTI grade, it’s likely that the USD/CAD pair will turn around. Ultimately, I think that will probably be short-term, but we will have to see. If we did break above the 1.26 handle, then I feel that the market is probably going to go to the 1.28 level above which is the next major resistance barrier. Expect a lot of volatility, but right now I believe it’s likely to be a market that sells off rather rapidly from time to time, so therefore I feel that it’s probably best to sell the rallies as they will be followed by sudden and impulsive moves to the downside. If we can break down below the 1.24 handle, then I think we really start to pick up momentum and fall apart.
Written by FX Empire