The USD/CAD pair fell initially during the session on Friday, but bounce just above the 1.06 level in order to prove that level to be supportive yet again. Lately, we have been bouncing off of the 1.06 level and testing the 1.07 level for resistance. The consolidation area looks like it’s a holding so far though, because we closed at the 1.0703 level. Ultimately, we need to make a fresh, new high in order to go higher, which is something that I do expect to see sooner or later. However, with the lack of liquidity in the markets are now, I think it’s probably going to be asking a bit much for this market to go any higher over the next couple of sessions.
Going forward, I fully expect to see this market break out above the 1.07 handle area, and head towards the 1.10 level, which is the next major resistance area on the longer-term charts. This of course is based upon the idea that the US economy is picking up in strength, while commodities in general are going to suffer based upon a stronger US dollar. Remember, the Canadian dollar is highly influenced by the oil markets, which of course are influenced by the US dollar again.
Intertwined economies.
These two economies are highly intertwined, so it is not surprising at all to see this market move sideways for long periods of time, followed by sudden bursts in one direction or the other. That’s essentially what I am thinking is going to happen, as the move to the 1.10 level more than likely be very quick. After all, that would be typical for this currency pair, as it is considered to be one of the more difficult ones for traders to hang onto based upon the fact that it can subtly move, but you have to wait ages for that move to happen.
Nonetheless, I have found it an interesting pair to trade simply because it does grind sideways. It makes for a calm trading environment, something that is sadly missing in most currency pairs. If you are patient enough, this pair is without a doubt one of my favorite ones. This pair to me looks like it’s going to be positive for some time, we just need to have that extra push to get above the 1.07 resistance zone.
