USD/CAD Forecast May 9, 2017, Technical Analysis

The USD/CAD pair rallied significantly during the day on Monday, as oil markets fell apart. In fact, we tested the 1.37 level, but found resistance in that area. I believe that we could get a bit of a pullback from here, but longer-term I think that the oil markets will fall apart and offer a buying opportunity. However, I would look for the oil market to continue falling to take advantage of a move to the upside in this market. If we can break above the top of the daily range, I think the market will then go towards the 1.3775 level. Ultimately, this market will be highly influenced by the crude oil market, and it seems that the markets will continue to be choppy, but I do think that ultimately pay attention to oil more than anything else will be the way to go.
Crude oil levels to watch
The crude oil markets breaking below the $45 level would be very negative, and should send this market to the upside from here. If we do see the crude oil markets break down below the $45 level, specifically the West Texas Intermediate market, this pair should find itself reaching towards the 1.38 handle again. There have been murmurs about the Russians and the Saudis looking to cut production in the future, but ultimately, I do not think that the market believes that they have the ability to affect supply, and therefore I think that any rally and oil will be sold off given enough time. This being said, I believe that in the ultra short-term, we should see sellers. Longer-term though, we should find plenty of reasons for this market to go higher. In a sense, it is a “two speed” market.