The USD/CAD pair fell hard during the session on Wednesday, but still remains above the 1.03 level that I had been watching for a potential sell order. However, I do believe that we are about to break down below that level, and as a result we will more than likely see this pair drift down to the 1.02 handle. It is below there that things get truly interesting as I think we could fall as low as parity in relatively quickly order.
However, this is also a perfect space to see a supportive candle at also. You have to keep that in mind as the market certainly will struggle to breakdown if the supportive action does in fact come into play. In fact, I think the next 24 hours will be very interesting for this market, especially considering that the Canadian dollar is strengthening as oil is just now finding support. Obviously, the oil markets do play a large role in the value the Canadian dollar, so that of course have to be taken into account any time you place a trade in this pair.
Trend line has been broken
The uptrend in line over the last couple of months is just now been broken below, so I do think that eventually we will see this breakdown. Whether or not it happens quickly could be a different story, but I think the writing is on the wall at this point. That being the case, the Federal Reserve of course comes into play as well and they will drastically move the value of the dollar one way or the other. That of course will show up in this currency pair as the two markets are so heavily intertwined. Canadian goods, and in fact 85% of them, end up in the United States every day, and as a result the Canadian economy is highly dependent on the American economy. In a roundabout way, this market is very backwards as the Canadian dollar strengthens because of the US economy, and not the other way around most of the time. On a break of the lows from the session, and more importantly the 1.03 handle, I am willing to start selling again.
