The USD/CAD pair went back and forth for the Friday session as the market simply cannot make any real headway in either direction currently. This is because of several different factors, but most notably the oil markets, and by extension – the Iranians.
The oil markets continue to rise based upon the tensions with the Iranians, and as a result the Canadian dollar has a bit of a bid built into it. However, this is all based upon headline risks, and as such is very hard to quantify. This makes this pair even choppier than it normally is, and that is saying something!
The market has several support levels below, and because of this we have been ignoring sell signals as they are simply going to be too tight in order for us to feel comfortable risking our trading capital. The parity level continues to keep the market down, and runs all the way up to the 1.01 level as it is fairly major in its scope. The Dollar is most certainly favored by a lot of traders out there against most currencies, but it simply hasn’t picked up much traction against the Loonie. The buying of this pair simply cannot be done however, until we get that close above 1.01 as well.
The support levels below are to be found at the 0.99, 0.98, 0.9750, and 0.97 levels. This causes us to really struggle to figure out where the trades could go if we sell, and this will simply keep us flat of this pair in the meantime, as the oil markets will certainly dictate how this pair goes, and the Iranians how that market goes. When you have a situation like this, it is very difficult to manage risk as it can come from anywhere, and at anytime.
However, we do have a couple of levels in which we can feel comfortable. If we close on the daily chart above the 1.01 level, we would be long and aiming for the 1.04 level. If we get a close below 0.97, we feel the market runs down to the 0.95 level, and probably below that level as well.
Written by FX Empire