USD/CAD forecast for the week of December 17, 2012, Technical Analysis

USD/CAD fell during most of the week, but did get a bit of a bounce just above the 0.98 handle in order to form a hammer. This hammer does suggest that we will bounce from here, but we do not like the idea of buying at this time because we see far too much resistance above the 0.99 handle. Quite frankly, it would not surprise us to see any bullishness squashed later in the week as we continue to go sideways. With this being said, the so-called “fiscal cliff” discussions going on in the United States will have an effect on this pair. If they do not go well, expect this pair to shoot straight up as money comes flooding back into the United States in order to buy treasuries.