The USD/CAD pair tried to rally yet again during the Tuesday session, but as it has over the last three trading days, it simply found the 1.03 level to be far too resistive. Because of this, I feel that we are eventually going to see a pullback, and quite frankly and surprise we haven't seen it already. Nonetheless, it's obviously a difficult market to buy into at this point time, and as a result I am on the sidelines.
However, I certainly don't want to sell this market as I feel the move above the 1.01 handle was indeed a bit of a breakout. I still think that we will eventually see 1.04, and possibly much higher. If we get downward pressure in this marketplace, I believe it will simply be a chance to buy the US dollar at a lower price. After all, we broke out of the 1.01 level, and have not come back to retest it for support.
Oil markets
The oil markets will go to bed during the Tuesday session, and certainly look like they are ready for a bit of a bounce. If that happens, then this pair should begin to fall. When things like that lineup, it does suddenly make sense that the marketplace is looking to retest the 1.01 level to see if it will be supportive. After all, the oil markets have plenty of noise in them as well, and I don't think that any move higher is going to necessarily be explosive.
However, I am generally bullish this market so I am waiting to see whether or not we get this pullback in order for me to get involved. I am not interested in selling unless we managed to close well below the 1.01 handle on a daily chart. At that point time, I would have to consider the momentum completely dead, and as a result would consider selling. This would also suggest that perhaps quite a bit of the commodity market selloff has been overdone, and we should consider selling the US dollar in general at that point.