The USD/CAD pair continues to break out during Friday trading as the 1.15 level is nothing but a distant memory now. It appears that if we pullback at any point in time, the US dollar will continue to strengthen overall anyway, so therefore there’s no way that I can sell this pair. On top of that, the US dollar is the favored currency around the world while the Canadian dollar continues to suffer due to almost no help from the oil markets. Sooner or later we will get pullbacks, but I look at those as value as the US dollar cannot be traded against for any significant amount of time at this point.
You can see that I have an uptrend line on this chart, and it looks as if the market is going to respect that. However, I am the first to admit that we could possibly be coming towards the top of the channel, if that’s the case of pullback would make sense. I think that the 1.15 level though should bring in enough buyers based on the fact that it was so resistive previously. We may be getting ready to head into an impulsive move higher, which is something that this pair tends to do from time to time anyway.
Oil markets are out of control
The oil market simply cannot get out of their own way at the moment. This is going to continue to work against the value of the Canadian dollar, so therefore have no interest in buying this currency, especially when it comes to trading it against the US dollar. Ultimately, I think that this pair probably goes to the 1.18 level in the relatively near term, with the 1.20 level being the longer-term target. I think will probably go even higher than that, but this pair does tend to chop around a bit considering that the two economies are intertwined as tightly as they are. Nonetheless, I just simply buy on dips as the US dollar continues to outperform the Canadian counterpart.
