USD/CAD forecast for the week of December 31, 2012, Technical Analysis

The USD/CAD currency pair fell during the first half of the week in order to retest the 0.99 handle. However, we get a nice bounce from their and close that the highs of the week in order to form a hammer. This hammer does in fact look like were ready to challenge the parity level, and more portly the 1.0050 level which we see as massively resistive.

If we can get above the 1.0050 level, we believe that the path to 1.04 is opened at that point. We expect quite a bit of resistance right around parity, but recognize the fact that a break above the highs from this week would in fact be a very bullish sign. Alternately, if we managed to close below the 0.99 level, this would be very bearish and have us selling.