The USD/CAD pair as you can see fell during the session on Tuesday, but did find a little bit of support at the 1.05 level. This is a surprise me, as it is a big round number, and of course that always attracts participants. On top of that, you can see that we have been grinding higher since we broke above the 1.04 level, and this consolidation has been mildly positive, and has formed a little bit of a tight channel.
The market has been interesting, simply because the Canadian dollar has been falling in value overall while the value of oil is been skyrocketing. This normally doesn't happen, so this tells me exactly how weak the Canadian dollar is at the moment. With that being the case, I know that there's only one way I want to be involved in this trade, because the US dollar of course is so strong.
The 1.04 level of course should offer support, and because of that I think that any pullback to that area could be a potential buying opportunity. I will continue to buy this market, at least until we get below the 1.03 level where I think at that point in time we would run into serious trouble for the buyers.
Watch the Egyptian headlines and the oil markets overall.
Watch out for Egyptian headlines it will have a massive effect on the oil markets, and the price of oil will often have an effect on the Canadian dollar. I believe personally that the market is overheated due to ridiculous fears out of Egypt, and that of course has boosted oil. While it has not helped the value the Canadian dollar, if will suddenly falls drastically, I do believe it will hurt the value the Canadian dollar. This is essentially what I'm waiting on, and when we finally get that I am more than willing to pounce and start buying this pair hand over fist. Until then though, I think that it will continue to be choppy with a slightly positive bias.