The USD/CAD pair fell during the course of the session on Friday, but found enough support near the 1.2350 level to turn things back around and form a nice hammer. That hammer suggests that the buyers are going to step in and if we can get above the top of the hammer, we believe that this pair will continue to the 1.28 handle. After all, the US jobs number turns out to be much better than anticipated, and that of course is going to move the markets drastically overall.
The Canadian numbers were fairly decent as well, but at the end of the day the oil markets tend to have a large influence on the Canadian dollar in general, and although they have done well lately, the reality is that oil markets are absolutely decimated at this point. That should continue to put pressure on the Canadian dollar, meaning that this pair should be a go much higher. With that, we believe that there is going to be continued pressure on this market to go higher, and reach towards a massive resistance barrier at the 1.30 handle. That was an area that turn the market around drastically after the financial crisis, so it is going to be very difficult for the markets to get above there.
If we did break above there, it would be lights out for the Canadian dollar as it would come completely undone. Because of this, we anticipate see a lot of volatility between here and there, and with an upward bias. However, do not be surprised if we get some massive selloff above. That should just simply look to be a buying opportunity for you, as unless the fundamental reasons for this market moving change, we will eventually break out. It’s going to take a lot, but it certainly can happen.
Even if we fell from here, we believe that there is a massive support barrier at the 1.20 level below, meaning that the market should find plenty of buyers down there. So if we fall, which is going to simply wait for the right supportive candle to take advantage of value in the US dollar.