USD/CAD made it to parity. Riding on the dollar’s weakness and rising oil prices, the Canadian dollar matches the US dollar for the first time in 20 months. Where will it go next?
The Canadian dollar equals one American one, and even more. USD/CAD dropped under 1.00 for the first time since July 2008 – just before the financial crisis. The move began on thin Easter Day trading. Most of the world, including Canada is on holiday. The final move happened on high volume on Tuesday, during the overlapping period between the London and New York sessions.
The Canadian dollar broke under 1.02 on the previous job figures, breaking under the 2009 low. The pair had a hard time breaking under 1, as this was a very strong support line. This ultimate round number was eyed by many traders, analysts and politicians. Canadian officials expressed confidence that the economy will continue to advance despite the strong currency.
USD/CAD – Where next?
If the break under 1 holds, the next support lines are 0.98 followed by 0.97. Both lines served already worked as support lines when the pair traded under 1.0000 at the beginning of 2008.
The all-time low of 0.9056 reached in November 2007 probably won’t return so fast. It was a swing move back then.
If the pair fails to hold under 1, the next resistance line is at 1.0060. This minor area held the pair on the way to parity. 1.02 is already an important line, followed by 1.04.
The state of the Canadian economy is good – employment is improving, GDP is growing at a fast pace and the recent rise in the price of oil completes the puzzle – Canada’s oil exports are a significant part of the economy.
This USD/CAD parity doesn’t change my sentiment that the pair is headed even lower.
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