The resilience in USDCAD even after the rally in Oil above 50$ is remarkable. The Dollar strength is immense and what will happen if oil makes a top and reverses lower? For the last few weeks we have seen the triangle formation all around fx blogs and trading sites. But the fx pair has given several false break out signals that trapped bulls. This time I believe it is different and we are really breaking above the triangle pattern in a move that could eventually reach even 1.38. What is needed for this to happen? Firstly we focus today at the NFP numbers announced later in the day. A good number will boost Dollar and thus USDCAD will most probably move past 1.33. But what about oil. Oil price is giving several diverging signals that warns bulls to be cautious. There is no confirmed trend reversal in oil price yet, but if it happens, USDCAD will explode higher.
I’m already short Oil and will be looking to buy USDCAD on good NFP numbers today. 1.38 is my target area while short-term support at 1.3150 and 1.3050 should hold otherwise we might see a bigger pull back towards 1.28-1.29.
Thank you for taking the time to catch up on my thinking.