Trading at 1.0017, the US dollar has gained significant ground against the Canadian dollar in just the last 24 hours.  Finding support at 0.9930 early last night in New York, the USDCAD has soared by over 80 pips to rise above the significant parity level.

Unfortunately, given the afternoon trade ahead of the weekend, the currency pair looks ready to consolidate just below 1.0050 for now.  And, although we would like to see the pair fall back and correct lower, given the current fundamental drivers (ie European dissension and rather mild risk tolerance) the likelihood of that remains small.  On the correlation tip, crude oil price are now lower by 1.27% – which should translate into further Loonie weakness in the short term.

Technical indicators are supporting this belief, with the stochastic reading dropping below the midbenchmark level of 50 currently at 43.17 – already falling from overbought territory and encroaching onto oversold signals.  The moving average crossover is additionally showing further upside potential in the spot exchange rate – with the 100 simple moving average rising above the 200 simple moving average.  Shorter term moving average crossovers above longer term moving averages are indicative of solid short term momentum.

As a result, any downward correction is likely to be met with enough supportive lift at the parity 1.0000 figure, as we anticipate for a correction higher to 1.0050.

More on Canadian dollar technicals - EUR/CAD Runs Into Resistance