Ben Bernanke sent the US dollar plunging by surprising the markets and not tapering bond buys. This was a positive surprise for stocks and all the other currencies. The Canadian dollar also rallied, extending earlier gains and reaching a three month high against the greenback. However, in comparison to other currencies, the reaction was relatively muted. Why? It comes down to the nature of the reasons behind the move. The chart shows that USD/CAD already broke below uptrend support a few days earlier. IT now broke below the 1.0245 support line which was the trough of July. However, it stalled around 1.02 and didn’t tackle important support at 1.0180 – the bottom of June. If it does make it below this line, 1.0125 and 1.01 will provide further support on the crowded road to parity. Above, 1.0285 now works as minor resistance above 1.0245, with 1.0360 already serving as tougher resistance. Why a weak reaction? Deciding not to taper means an ongoing high pace of USD printing, which also pushes oil prices higher. As Canada is an exporter of oil, shouldn’t the loonie rally? Not so fast: the Canadian economy depends on demand from its southern neighbor more than on oil, at least for now. The Fed decided not to taper as it requires further evidence to a sustainable recovery. Ben Bernanke also expressed worries about the situation and mentioned that the unemployment rate doesn’t really show the real picture of the labor market. With a not-so-positive outlook for the US economy, also the Canadian economy has some limits, and so does the Canadian dollar. A more upbeat Federal Reserve would have sent the C$ higher. So, the despite the big drop in USD/CAD (or big rise in CAD/USD), the road to parity relative long, and full of bumps. For more, see the Canadian dollar forecast. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next AUD/USD surges to high resistance after the Fed surprise Yohay Elam 9 years Ben Bernanke sent the US dollar plunging by surprising the markets and not tapering bond buys. This was a positive surprise for stocks and all the other currencies. The Canadian dollar also rallied, extending earlier gains and reaching a three month high against the greenback. However, in comparison to other currencies, the reaction was relatively muted. Why? It comes down to the nature of the reasons behind the move. The chart shows that USD/CAD already broke below uptrend support a few days earlier. IT now broke below the 1.0245 support line which was the trough of July. However, it stalled… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.