The USD/CAD pair rose during the session on Tuesday but the 1.05 level offered significant resistance, keeping the market down slightly. However, the market is at the top of the consolidation area that the market has been in for some time now, and as a result I am a bit hesitant to go along at this point, but I would love to buy at a lower price on some type of support. In fact, I believe that the 1.04 level would be an excellent place to start buying again, simply because we are going to consolidate, before breaking out to the higher levels, possibly the 1.06 handle.
However, if we get above the 1.06 handle, we could see this market go as high as 1.01 level. Ultimately, I believe that the US dollar will continue to strengthen overall, and as a result would not surprise me that this market goes higher. Alternately, I believe that the market should be difficult though, as it tends to grind for long periods at times, and then explode in one direction or the other.
Oil markets will have to be watched as well
The all markets will have to be watched as well, simply because the Canadian dollar is very sensitive to the way to trade. However, keep in mind that there are a lot of different moving parts at the same time, and as a result it's not all about the US dollar, it's also about supply and demand. The question then becomes whether or not there is going to be any demand, because the markets look a bit soft around the world, and as a result one has to wonder whether or not there will be demand for oil as there will be less and less use for energy as the factories and industry won't need as much.
Going forward though, I think the oil markets will be a very dangerous place, and that will more than likely throw this currency pair around again and as a result it's going to be a place where you will have to have serious wherewithal to hang onto the longer-term trade.
