USD/CAD Forex Signal 13/11: Breakout Above 1.43? (Video)

(MENAFN- Daily Forex) Potential signal:

Although I prefer pullbacks, on a clearance of 1.43, I would buy with a stop at 1.42 and a target of 1.4465 above. The USD/CAD pair continues to grind higher, but sooner or later, one assumes gravity shows up again. Whether it does – we do not know.

USD/CAD

The U.S. dollar initially pulled back just a touch against the Canadian dollar during the trading session here on Thursday, but has seen renewed upward mobility as the U.S. dollar in general has rallied.

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We find ourselves threatening a big figure in the form of 1.43, and if we can break above there, that could kick off the next leg of Canadian dollar weakness are multiple things going on at the same time.

The first, of course, is that oil has been somewhat soft, and that hurts the Canadian dollar. The correlation between crude oil and the U.S. dollar against the Canadian dollar is starting to disappear over the years, as the United States produces 14 million barrels of oil a day.

So, with that, I think it's a little bit of a knock-on effect. But the reality is that real rates in America continue to pay you to hold U.S. debt. You get a guaranteed return above inflation. That means other things don't fare as well. Canada doesn't have that.

And, of course, the employment situation in the Canadian provinces and the United States is a completely different story. Canada actually lost jobs last month, while the United States almost tripled its expectations. That's a world of difference.

EURUSD Chart by TradingView

The Bank of Canada is probably going to have to stand pat for a while, while the Federal Reserve is almost certainly hiking in December.

That being said, I don't think this market breaks out right away. It is starting to feel the effects of gravity, and that makes a certain amount of sense. But I do like the idea of buying pullbacks

However, if we were to break above the 1.43 level, then it is yet another hurdle that the dollar has cleared, and I would be aggressively entering the market at that point. All things being equal, though, I think a pullback is probably due.

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