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Forex pairs in this Article » USD/CAD
By: DailyForex.com

The USD/CAD pair had an extraordinarily bullish session on Wednesday, lodging for the 1.06 handle and smashing through the 1.07 level. The 1.07 level was the area that I needed to see broken to the upside in order to become very bullish of this pair, and start adding to previous positions. This now shows a market that’s ready to break out to the upside and really take off, as there isn’t much in the way of resistance between here and the 1.10 level.

With the FMOC announcing that it was tapering off of the bond buyback program, this is essentially the same thing as cutting back on quantitative easing. Cutting back on quantitative easing essentially strengthens the US dollar, and as a result I feel that this market is going to go to at least the 1.10 level, possibly even higher. This is a pair that tends to go sideways for significant amounts of time, and then will shoot straight up or straight down, depending on the economic headlines. After all, these two economies are highly interconnected, so it makes sense that the moves tend to be sudden.

Watch the oil markets

Watch the oil markets for any potential influence on the Canadian dollar. The Canadians send a massive amount of oil into the United States, so that obviously will have a major influence on this particular currency pair. That being said though, right now it appears that the markets are trying to price in the fact that perhaps the economy in the United States is stronger than anticipated. The best case, then of course investors will feel more comfortable trading in favor of the US dollar, as more and more financial resources are sent into the USA.

In a world where much of the currency markets are debated in terms of the EUR/USD pair, it makes sense that the US dollar will appreciate against most other currencies, as Europe finds itself in a situation where deflation becomes a serious concern. Some of that may cause a little bit of a knock on effect in this pair as well. Regardless, I feel that pullbacks are buying opportunities in the USD/CAD pair for the next several weeks.

USDCAD Daily 121913

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