The USD/CAD pair went back and forth during the session on Wednesday again, hovering around the 1.04 level. This area is indeed significant and its importance, as it is an area that we have seen significant support previously, as well as resistance. The real question is whether or not we can break down from here or are we just simply looking for a pullback that continues the move higher that we had seen form one month ago. It's a bit difficult to tell at this point in time, but it should be stated that this pair has been having trouble rallying as oil markets continue higher. That of course is very odd, and as a result I have been watching this pair quite a bit.
Having said all that, I still think that we need to get above the 1.0450 level in order to start buying. Far as selling is concerned we need to get below the 1.03 handle, an area that has significant support at it. Going forward, I expect a fairly tight market, and that this market will be difficult to trade into we break out of this particular range. In the meantime, this is a very short-term market, and unless you have the ability to trade the market based on 15 min. charts or something like that, you should not be involved.
Canadian numbers haven't exactly been stellar
Perhaps part of the reason this pair hasn't been "acting quite right", is the fact that the Canadian economic numbers haven't exactly been strong lately. In that sense, oil probably doesn't matter all, and the oil markets seem to have a mind of their own at the moment. This pair looks like one that is in a holding pattern for the time being, almost like it needs to make up its mind now. That's pretty common for this pair, as it likes to grind sideways and will simply take off in one direction or the other. With that in mind, I feel that this market will eventually give us the signal that we need to see, but right now it simply is not doing so.