The USD/CAD pair fell after touching the parity level on Thursday as we had predicted. This pair is currently one of the most reliable ones in the sense that it has been so range bound. With this being said, it has been a pair that has been controlled by the oil markets, which are being controlled by a lot of different forces at the moment.
The parity level still looks very strong, and it has the 200 day EMA above it as well, and this should continue to keep the pair down. As long as there is uncertainty in the Middle East we will see a certain amount of a bid in the oil markets in general. The Canadian jobs report came out on Thursday as well, and it was a blowout number. Canada added 82,000 jobs last month, and this is about 8 times more than expected. With that being said, the Loonie was always going to gain against the Dollar.
The oil markets have been sliding, but there is a lot of uncertainty in that commodity and more specifically the movement of it, so the fall has been a bit of a grind, keeping the Loonie from falling in value too quickly.
The 0.98, 0.9750, and 0.97 levels all should be supportive too, so we don’t see this pair falling too rapidly either way. It is almost like it is simply too weak to rise, rather than overly bearish. In a world where there is a lot of uncertainty, the Dollar will always have at least some kind of a bid, so this will keep it from melting down as well. The pair has a long history of being choppy, so the simplest trade is almost always the best one as a filter to keep the noise out.
The selling of rallies continues to be our play. Selling close or at parity certainly has worked out lately, and we will continue to do so. The buying of this pair isn’t able to be done until we get above the 1.01 level on a daily close as it shows a momentum change. We are currently trading this pair for the short-term only.
Written by FX Empire