The Race to Parity

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A new wave of dollar weakness brings the Canadian dollar and the Swiss Franc closer to parity. Both just made strong moves, but have different characteristics.

USD/CAD

The Canadian dollar made a move during Canadian Thanksgiving. After closing at 1.0421, USD/CAD went to the low 1.03s, where it was stuck above the support line of 1.03. This was a significant resistance and support line during 2003.

And now, when holidays around the world ended, the Canadian dollar enjoyed the weakness of the greenback and made a breakout. USD/CAD fell below 1.03 and is now trading at 1.0275.

On the road south to parity there’s no additional resistance support line. A round number is a psychological barrier, as well as an intuitive number to place stop loss order.

In the case of USD/CAD, parity isn’t only a very round number. 1:1 served as a support and resistance line in the past as well.

For more on the Canadian dollar’s week, read the USD/CAD Outlook.

USD/CHF

The second currency that’s getting close to parity with the dollar is even closer. The Swiss Franc made a strong move: USD/CHF fell from 1.0250 to just below 1.02. But here, there still a barrier.

USD/CHF bottomed at 1.0176 on September 22nd. Although it was a swing move then, it was followed by another dip a day later. Currently trading at 1.02, USD/CHF is closer to parity, but will have to overcome the 1.0170 support line.

Similar to the Canadian dollar, parity served as a support line in July 2008.

Both currency pairs traded below 1 during the winter of 2007-2008. This ground isn’t uncharted to them. Are they going to hit parity soon?

Further reading: About how Friday’s excellent employment figures in Canada got USD/CAD closer to parity.

Get the 5 most predictable currency pairs

About Author

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.