Slumping oil hitting Canadian dollar hard
USD/CAD is up 86 pips to 1.3406 as the loonie wilts. The pair is higher for the sixth consecutive day.
There is virtually zero traditional technical resistance on the chart as it breaks out after a month of consolidation. The technical signals were the reversals on the day before the Fed and immediately after the FOMC. After a quick two-cent fall, USD/CAD shot higher and finished the day up.
Since then it's been a grind higher that accelerated yesterday when oil prices reversed. The slump in oil prices extended in early US trading today and that's pushed the pair further. In addition, yesterday's soft Canadian retail sales report added another reason to buy USD/CAD.
At the moment, I don't like buying her and I suggest longs take profits. It's been a good run and there's always the chance of a blow off but in this case I don't see it. You tend to get a quick squeeze when the market is offside but very few people have been trying to sell USD/CAD.
Instead, look for consolidation down to 1.3300 and consider buying there. I expect 1.39-1.40 within 6 months. As always, oil is the critical factor.
