The USD/CAD pair again during the Wednesday session as the 1.0250 level acted in a supportive manner yet again. This pair has recently broken out above the 1.01 level, and as a result many technical traders, myself included, would have loved to seen some type of pullback to that level to prove it as being supportive now. However, it doesn't always do that and sometimes you have to settle for simple sideways action.
This might be what we're seeing in this pair. We could simply go sideways until the markets get lulled to sleep, allowing new buyers to step in with a bit more confidence. If that happens, I will be watching this pair, but what to see a daily close above the 1.04 level as it would be significant break of resistance. Because of that, we could have a significant run higher in that particular set of circumstances.
Alternately, if we do pullback I believe the 1.01 level should hold as support. However, it is possible that we break back down below it. I figured that point time, this would have to be ready is a very bearish signal, and I would be very short of this pair. However, I don't think this is likely to happen, and I will buy supportive candles going forward if we can get a bit of a pullback.
Bank of Canada
The Bank of Canada has recently admitted that the economy may not warrant interest rate increases as quickly as once thought. If that's the case, it could be an indictment on global growth, which we now know is starting to get kind of weak. In that circumstance, the US dollar gets a bid as the safety of the greenback continues to attract investors.
Alternately, we could simply be a matter of US strength. The US strength should eventually propel the Canadian economy forward, but there is a bit of a lag time. If we can get above that 1.04 level, I don't really care what the issue is - I will be buying this pair and aiming for the 1.10 level.