By: DailyForex.com
USD/CAD fell initially during the session on Wednesday, but as you can see found enough support below the 1.03 handle in order to form a candle that looks much like a supportive hammer. This of course is a good sign, and I do believe that the market is trying to show that it wants to go higher. However, I believe that the 1.04 level will offer significant amount resistance, and that the markets will struggle to get above that area in the near-term.
That being the case, you have to look at the fact that the two economies are so intertwined that the confusion as to the Federal Reserve and its decision to not taper off of quantitative easing will affect both currencies. Going forward, I fully expect the oil markets to continue to offer a bit of guidance, as well as the US dollar itself as we continue to decide whether or not the decision to hold off on tapering was positive for markets, or if it could be signs that the economy isn't going as well as one had hoped.
Oil and the Federal Reserve will continue to push this market around.
Keep an eye on both the oil markets and the Federal Reserve. Headlines coming out of the members mouse from the Fed will continue to push the markets around as traders try to discern when the Federal Reserve could actually taper off of the quantitative easing program that we have been on for so long. This being the case, you can expect a lot of volatility based upon random words in news conferences and speeches, and as a result there is always going to be the opportunity for sudden move in one direction or the other.
On the other hand, oil markets of course drive the value the Canadian dollar quite often, and they of course have been very volatile to say the least. Nonetheless, the oil markets are in a bit of a range though, so that does help us predict a little bit of the next moves for the Canadian dollar itself. As the market stands right now, I believe that we will continue to go higher, but it is not going to be a smooth ride.
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