The USD/CAD pair initially fell during the day on Wednesday, but then turned back around to form a bit of a positive candle. It looks as if the market is ready to continue grinding higher and we of course do prefer the upside in this pair. With that, we are buyers on a break above the recent high from a couple of sessions ago, and believe that that point the US/CAD pair would reach towards the 1.34 handle. After all, we have been in a fairly strong uptrend for quite some time now, and of course now that we have balanced after a significant pullback only solidifies our result when it comes to being bullish of this pair.
Keep in mind that the Canadian dollar is highly sensitive to the price of crude oil. That is a market that seems to be falling apart, and as a result it’s only a matter of time before this market takes off to the upside in our experience. We believe that short-term pullbacks could be buying opportunities, just as a break out to the upside is. Eventually, we will trying to reach towards the 1.34 handle, and then the 1.35 level. The 1.35 level of course is a large, round, psychologically significant number, but ultimately a minor one at that.
The US dollar continues to strengthen against most currencies around the world, and keep in mind that the Canadian dollar is not only a proxy for oil, but a proxy for commodities in general. As long as we see so much softness in all of the futures markets, it’s hard for us at FX Empire to believe that this market is going to start falling with any real vigor. It’s not that we expect some type of “melt up” in this particular market, it’s just that the momentum and strength of course is to the upside. In fact, we have no interest whatsoever in selling this market, at least not until we break down below the 1.28 level, and that of course isn’t going to happen anytime soon.