The USD/CAD pair fell during the session on Monday, as you can see breaking the low of the 1.04 handle. This area of course has been supportive in the past, so what I found interesting is that we not only managed to break down below it, but close towards the bottom of the candle. However, I see quite a bit of noise underneath that could cause support in this market, extending all the way down to the 1.0250 level. With that being the case, the markets should find a support area in this general vicinity that should produce a supportive candle. That of course would be a nice buy signal as far as I can tell, and I believe that the market would race back towards the 1.05 handle.
Going forward, expect the oil markets to drive this market and push around the value the Canadian dollar specifically. There are a lot of moving pieces at the moment, and with that being the case, I suspect that the market will be choppy, but I am basically in a "buy only" mode. I am simply waiting for the right supportive candle in order to go long as I think ultimately we will break above the 1.06 handle, which is the "ceiling" in this market.
Federal Reserve, oil markets.
The Federal Reserve and whether or not it's going to taper off of quantitative easing of course is the biggest question that markets have at the moment, and this will of course play havoc with this particular currency pair as the Canadian and American economies are tied so closely together. Because of this, the market does tend to be choppy from time to time, but it will suddenly move several handles in one direction or the other. I believe that we are still seen quite a bit of support based upon a potential uptrend line, so going forward I think that buying will be the only option I have. Above the 1.06 handle, I believe there is nothing stop in this pair from hitting the 1.10 handle, something that I would expect to see sometime early next year.