USD/CAD Technical Analysis – February 2 2015

The USD/CAD pair broke higher during the course of the session on Friday, as we continue to drive higher in this market. The pair continues to be a bit of a “perfect storm” as far as I can tell, simply because the US dollar of course is the strongest currency in the world, and the Canadian dollar has a couple of different things working against it. For starters, the oil markets certainly is not helping the Canadian dollar, as there is very little in the way of bullishness when it comes to the petroleum markets. On top of that, the bank of Canada recently did a surprise interest-rate cut, and that of course work against the value of a currency as well.

Now that we have broken well above the 1.25 level, I believe that this market is going to head to the 1.30 handle. However, you have to keep in mind that the area was a massive resistance barrier back during the financial crisis. With that being the case, it will certainly be difficult to break through there, as we tried to get above there several times during that time. Ultimately though, that’s where the real fight is, and I feel that the market has to go up there. I will be buying dips going forward as the US dollar should continue to strengthen against the Canadian dollar. If we can get above the 1.30 level, the Canadian dollar is crushed. On the other hand, that might be the end of the uptrend, and we can start shorting again but we will need some type of boost in the oil markets in order to see that.