The USD/CAD pair broke higher during the course of the day on Tuesday, testing the 1.40 level yet again. This is an area that’s been massively resistive recently, and if we can break above it is of course a very bullish sign. I think at this point in time that if we can break not only above the level but also the highs during the session which were slightly more positive than that, the market should continue to grind its way even higher given enough time.
The US dollar has been one of the strongest currencies in the world right now, as markets continue to be concerned over several economic situations globally, and that of course tends to have the market looking for the US dollar for safety. Pullbacks at this point in time should just simply be buying opportunities in what is obviously a very strong uptrend.
Keep in mind that the oil markets have a great influence over the Canadian dollar, and they of course look very soft. Because of this, the market should continue to go much higher, and pullbacks will be thought of as value when it comes to the US dollar in general. The Canadian dollar is suffering due to not only the oil markets, but the idea that the US dollar is without a doubt the safest currency to deal with right now.
In fact, we believe that the floor in this market has moved up to the 1.38 level, and as a result it’s only a matter of time before we go higher every time we pullback. Ultimately, this market should continue to go much higher over the next several years, which should continue to offer plenty of buying opportunities again and again going forward. In fact, right now we don’t even have a scenario in which we are willing to sell this pair, because quite frankly oil markets look like they are nowhere near finding a bottom, and of course economic concerns and nervousness out there should continue going forward with all of the moving pieces in the news.
