The USD/CAD pair went back and forth during the session on Friday, ending with a slightly negative candle. However, at the end of the day we really didn't decide very much, to continue to hover around the 1.05 level. Sure, the 1.05 level is a psychologically significant number, but the real resistance in my opinion is at the 1.06 level. Because of this, I am not ready to start buying yet, but I certainly think that we will eventually breakout to the upside, we are just waiting to get that burst of momentum in order to do so.
Remember, we are at the end of the summertime, and of course the majority of large money traders are on holiday. Because of this, I think this pair will probably languish in this general vicinity for the next week or so, but when the money comes back into the market I think it will certainly be buying the US dollar in general.
Watch the oil markets
Anytime you're dealing with the Canadian dollar, you have to keep an eye on the oil markets. However, at this point in time it's especially important as the oil markets have been so parabolic recently, and have only in the last couple of days have begun to pull back a bit. Oil markets are overbought to say the least, but as there are plenty of headlines pushing the oil markets around right now, the emotion driven trading could possibly continue. If that's the case, the Canadian dollar will not we can as substantially against the US dollar as many of the other worlds currencies. However, if we can get the oil markets to calm down this pair will almost certainly breakout to the upside.
I am also wanting any pullbacks at this moment. This is because I believe the 1.04 level is going to be very supportive, so any type of supportive looking candle down in that general vicinity would have me buying immediately. Going forward, I am very bullish of the US dollar in general, and that's not going to be any different against the Canadian dollar.
