Forex weekly forecast: USD/CAD

ForexNewsNow | Published on October 19, 2010 at 1:26 am

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Canada dollar CADNEW YORK (Forex News Now) – The USD/CAD pair has been stuck in a consolidative range for the last year as the parity level continues to support the USD against its northern neighbor.

While the psychological effect of parity has probably been worn down over the last couple of years, one cannot ignore the fact that it has been holding for the last twelve months.

The forex weekly forecast for the pair is for it to be a slow grind up. As noted on the chart attached, the support area has been reached again, and judging by the shape of the weekly bar, which is a perfect hammer, it appears that the pair is looking to make a return trip to the top of the range we have been stuck in this year. This would suggest that the pair will test as high as 1.0700 before this move is all said and done.

cad-usd

Looking at the pair from a fundamental view, the forex weekly forecast is also supported by the oil markets, and the simple trade flows between the two countries. The oil markets are starting to look a bit on the tired side, as support for the commodity is slumping slightly.

While it is true that traders are running from the US Dollar, a weak economy suggests that there will be little demand for energy as well. As Canada is the largest exporter of oil to the USA, this makes sense that the Loonie might struggle to make massive gains against the Dollar, even though the rest of the world has found it so easy lately.

Secondly, it should be noted that a large portion of Canada’s economy depends on Americans buying their goods. The Americans are by far the largest trading partner of the Canadians, and as such, the bad situation in the US will hurt Canadian exports. Canada may find that its biggest problem is the neighbors

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