The USD/CAD pair has been on a massive bull run as of late, and the Friday session will have done little to change that perception. The 1.03 level was breached during the session, and although the market was repelled at that level, this still shows the overall bullishness in this market.
The oil markets are certainly going to have a massive input into the attitude of this pair, and as a result anyone trading this market needs to be aware of what is going on in the oil pits. For example, the Light Sweet Crude markets have been showing a lot of support at the $90 level lately, and as a result the selling has slowed down over the last couple of sessions.
However, if the $90 level gives way, the Canadian dollar will be sold off as a result. The 1.03 level is a big resistance area, so a break above it would certainly mean something. The breaking of this level and the close above it on the daily chart will have us buying as it shows a resumption of the bullish momentum. Obviously, there is a real chance that the level could hold as well, but with the recent bullish behavior, it would take an obvious signal for us to sell.
The parity to 1.01 level giving way as support would be such a signal, and this shows just how bullish this pair suddenly is. The oil markets will more than likely have to spike in order for this area to give way as support, so again – a lot of this depends on oil markets.
The US dollar has simply been far too strong lately as the European Union’s problems keep forcing investors out of that area, and into the United States. The demand for Treasuries continues, and as a result this should continue to drive demand for the USD. This in turn will continue to hurt the price of oil, and as such the Canadian dollar.
We feel that the next move is up, but we need confirmation in the form of that daily close above the 1.03 level. As a result, we are sitting tight at the moment, but willing to buy without hesitation if this happens. Also, there is the possibility of a pullback, in which we would buy supportive candles near the 1.01 to parity support zone.
Written by FX Empire