The USD/CAD pair went back and forth during the session on Friday, in reaction to the nonfarm payroll number as it typically does. By the end of the day we had essentially got nowhere, and as a result I believe that we will continue to consolidate just above the 1.06 handle for the short-term. If we can get above the 1.07 handle, I believe that is the signal that we start going to the 1.10 level. That is ultimately where I think this market is ready to go, however we will more than likely have to fight back and forth until we make that move.
This pair typically will react strongly to the nonfarm payroll number, simply because the Canadians send so many of their exports to the Americans. Obviously, the market will have to be working in order to buy those commodities, and as a result this pair is one of the "dark horses" when it comes to this particular announcement.
The 1.05 level below should support the market.
As far as I can tell, even though the 1.06 level is the support area, I believe it extends all the way down to the 1.05 level. With that in mind, I think that this market will continue to be supportive, and I am willing to buy any type of supportive candle between here and the 1.05 handle. That level is where I would switch my attitude on this market, but right now it looks like were ready to start buying any time this market falls.
The question then becomes whether or not the 1.10 level will contain the market, and that will rely on bigger questions. However, I believe in the meantime supportive candles in this general vicinity should give us plenty of room to go much higher, and make a nice bullish run for those of you who are bullish of the dollar. Pay attention to the oil markets, because it continues to drive the market as well, as it typically does. The Federal Reserve and its tapering prospects continue to be positive for the US dollar as well.
