The USD/CAD pair rose during the course of the session on Friday, bouncing off of the 1.30 level in order to form a very strong looking candle. Because of this, I feel that this market will continue to go much higher, perhaps breaking all the way to the 1.35 level. However, this will be a very choppy market as it typically is anyway, and the 2 economies are so intertwined.
The fact that the United States added more jobs than anticipated, while the Canadians actually lost jobs last month should only add fuel to the fire when it comes to this particular pair. The 1.30 level has been important on longer-term charts, and of course we have the uptrend line that I have marked on this chart. Because of that, it makes quite a bit of sense we should continue to see bullish pressure, and perhaps buyers every time we pullback.
Don’t forget oil
During the course of this trade, do not forget the correlation between the oil markets and the Canadian dollar. After all, the Canadian dollar is often used as a bit of a proxy for the petroleum markets, and they look soft. So having said that it makes sense that if the oil markets continue to fall, this market should continue to rally. I don’t necessarily believe that we are going to shoot straight up, but I think that the choppiness going forward will probably mimic what we see in the oil markets as well. The oil markets have been testing pretty significant support, and could very well bounce in the short-term but I believe that longer-term oil continues to fall, and that of course continues to put pressure on the Canadian dollar itself.
With that being said, I am bullish but I think you’re going to have to be able to essentially place your trade and just hang on. It is not until we break down well below the 1.30 level that I would consider selling or at least be concerned about the uptrend.
