The USD/CAD pair fell during the Tuesday session, as the 1.0150 level offered only slight support. However, later in the day we did see the market pullback and form a little bit of a hammer at this point. I have been watching the 1.01 level as you know, and I do think that perhaps some of the bounce that we got might have been the beginning of the support level down at that handle. I also believe that this is a likely place to see more buying of the US dollar, as it was such a significant breakout back in the middle of February.
Adding to my bullishness of the US dollar is the fact that the US dollar index does indeed look very bullish after the Tuesday session. That futures contract formed a hammer, right on top of support and it looks like the US dollar should gain in general. If that's the case, will markets may struggle, and if that happens - the Canadian dollar certainly will suffer.
Watch the headlines
This pair can be very sensitive to the headlines, and as a result I think this might be trying to tell us something. However, the calendar over the next couple of days features several central bank meetings, and of course the nonfarm payroll announcement on Friday. This pair is very sensitive to the jobs report in the United States, so it'll be interesting to see what happens.
Because of all of that, it is very possible that traders simply decided to get out the market. There are certainly enough headline risks out there at the moment, and I have even discussed things going on in Europe. Another was, a lot of traders may have simply left their desks and decided to take on the market next week. I think that the later you get into the market, this is more likely than not going to be the case. However, I am more than willing to buy this market on a break above the highest from the Tuesday session, as it shows that the momentum has picked back up and the 1.01 level has indeed offered support.
