The USD/CAD pair fell during the session on Tuesday, but formed a hammer as some of the losses recouped. We are currently sitting above a massive support zone from the 0.98 to 0.9850 level, and as such it’s very likely that there is a bit of accumulation going on at current levels.
The oil markets will of course have an effect on the value of the Canadian dollar, but as the world gets more and more nervous it is likely that the US dollar will be bought up in droves. The consolidation runs well over a year, and runs from the 98 handle all the way up to the 1.04 handle. While this will be a very long and top road higher, we believe that this point in time that a return the consolidation is probably the likelier of two potential outcomes.
The other potential outcome of course is this market selling off. However, we need to see a daily close well below the 0.98 level in order to start selling this pair as it would open the door to the 0.95 handle.
Written by FX Empire