USD/CAD fell hard during the session on Wednesday, breaking several stops along the way. The pair is typically tied to the oil markets, and as a result – we normally will watch both simultaneously. Something odd happened today – the CL contract was very flat, suggesting that this pair should have been very quiet.
With the CL struggling at the $85 mark, this should give pause to selling this pair. The parity level below is our real gauge as to the strength of the downdraft, and this pair hasn’t reached that yet. Quite often this pair will react a couple of days late in the oil markets, so watch the CL and COIL contracts to see future direction as both of those oil contracts look a bit weak at the moment. This would suggest this pair should rise.
However, you would be smart to look for a signal to go long such as a hammer on a shorter time frame before buying. It is at an area that was supportive before, so it will be interesting to see what happens. If we can break the 1.07 over the next few days – this pair goes much, much higher – probably as a result of global bearishness in most markets.