Usd/Cad up against support now as we see oil possibly rolling over. Remember that a sell off in oil will jointly hurt the USD and the CAD. Why you may ask? Canada exports a lot of oil, falling oil prices will reduce the amount of oil being purchased, therefore less demand for Canadian dollars as the prices fall. Oh but wait, oil is denominated in the USD, the oil standard currency. So if less oil is being purchased or even shorted, the dollar will feel this as well. What does this mean? Who will take the bigger hit? The CAD should take the bigger hit but the pair should become more volatile if there is more profit taking. CAD due to falling oil prices, USD due to falling demand of the currency that dominated or denominates oil prices. Higher volatility with oil prices, higher volatility with FOMC talks tomorrow. Watch for the pull back.
Oil also has a lovely divergence formed today. I believe this last push was likely an over extension of the oil prices, making me believe oil should pull back near $90 a barrel over the next day or so if not $87.5o. I could be wrong and oil could find support, kill the chance for a bearish divergence to play out and move to $95 but.....I am not holding my breath. If oil drops, expect that GBP/CHF trade to play out. I think we could see this pair finally move with the pressure it is under, it has to break sometime.
Oil also has a lovely divergence formed today. I believe this last push was likely an over extension of the oil prices, making me believe oil should pull back near $90 a barrel over the next day or so if not $87.5o. I could be wrong and oil could find support, kill the chance for a bearish divergence to play out and move to $95 but.....I am not holding my breath. If oil drops, expect that GBP/CHF trade to play out. I think we could see this pair finally move with the pressure it is under, it has to break sometime.
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