USD/CAD – Where to Buy

USD/CAD – Where to Buy

USD/CAD – Where to Buy

Many investors are confused today about why the 6% drop in oil prices today failed to send the Canadian dollar sharply lower. Instead, USD/CAD closed firmly below 1.40 and appears poised for a move down to 1.38. Apparently there was heavy selling by leveraged funds, which may continue. However when USD/CAD diverges this much from oil on a day where the U.S. – Canadian 2 year yield spread moved in favor of USD/CAD gains, we can’t help but view this as an attractive buying opportunity. The biggest risks for the Canadian dollar this week are the regularly scheduled weekly oil inventory data and Friday’s employment report.

Technically USD/CAD has entered the sell zone according to our double Bollinger Bands and this means we could see a bit more weakness in USD/CAD. However the first level of support comes in at the 40-day SMA near 1.3875. This would be the first place that traders could potentially buy USD/CAD. The better level would be slightly above 1.3815, a level that served as support for the currency pair on many occasions in late December.

Chart Of The Day

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