The USD/CAD pair initially fell during the course of the session on Thursday, but turned back around to form a nice-looking hammer for the session, which of course is very bullish. The 1.30 level is a major round number, and an area that is important overall. With the forming of a hammer, it looks as if the buyers are going to continue to get involved and push this market higher possibly. We have the Nonfarm Payroll Numbers coming out during the session today, and that of course can truly move this particular pair.
Keep in mind that the oil markets have a massive influence on the Canadian dollar as well, so if oil markets fall during the day, it normally will push this market higher and that could give us the fuel that we need for that move. We see a significant amount of resistance at the 1.33 level above, so it’s very likely that we won’t get the short-term buying opportunity but more than likely will have to pull back from there in order to build up enough momentum to finally break out to the upside. Keep in mind that there is a massive amount of resistance all the way to the 1.35 level, so the move to that area will be difficult to clear.
We get above there; this pair could go much higher. However, there is a lot of noise to break through in order to do that move. On the other hand, if we break down below the bottom of the hammer from the Thursday session, this pair could continue to go much lower. This will also be the case if the oil markets go higher. That tends to influence the Canadian dollar as well, and that will drive this pair lower, perhaps reaching towards the 1.28 level at that point in time. With this in mind, the USD/CAD pair is often the overlooked market to trade during Nonfarm Payroll Friday announcements, and as a result we often like to look for trading opportunities in this market while everybody else is worried about other markets.