The USD/CAD pair had a very volatile session during the day on Thursday, as we initially tried to rally but then turned around and wiped out all of those gains. Part of this is driven by oil, and the other part of course being a lot of the concern and political theater coming out of Washington DC. With that, we could continue to see some bearish pressure, but I believe that this market is probably best left alone until we get some clarity. If we can break down below the 1.35 handle, then I believe that we will break down from there. Alternately, a daily supportive candle in this area could be worth taking to the upside as it is an area that I found very important on the longer-term charts.
Oil and $50
The WTI Crude Oil market has a significant amount of resistance at the $50 handle. I think that would also be helpful in determining where this pair goes next. If we can break above the $50 handle in that market, then this market should continue much lower. Alternately, if that level offers resistance and oil cannot break above it, then this pair will more than likely bounce. There are a handful of Canadian announcements coming out during the session today, so that could have a bit of influence as well, but I’m looking at this rude prism of a longer-term move, and of course oil has to be taken into account any time you look at the Canadian dollar through that lens. The correlation is very strong, and should continue to be so going forward. Regardless of what happens next, I think the one thing you can probably count on is going to be a significant amount of volatility.
Written by FX Empire