USD/CAD Forecast May 31, 2017, Technical Analysis

USD/CAD daily chart, May 31, 2017

The USD/CAD pair rose during the day after initially drifting a little bit lower on Tuesday but found the 1.35 level to be resistive. By running into that resistance, it sets up a very interesting potential trade in this market. I believe that if we get a daily close above the 1.35 level with some type of significance, then we may have an opportunity to start going long, especially if we can clear the 1.3550 level. Alternately, if we pull back from here, it’s likely that the Canadian dollar will continue to gain strength. This will be especially true if the oil markets rally, which are at very important levels currently. I believe that this market continues to be volatile, but a break above the 1.3550 level is a “higher high”, and therefore will attract a lot of attention.

Oil rolling over?

There is a bit of an argument to say that oil may be rolling over again, and if that’s the case then this market should continue to go higher. Ultimately, this is a proxy for the crude oil market as far as currency traders are concerned, so pay attention. I think that if we can break above the 1.3575 level, then the market can go even further. Nonetheless, I do believe that this will be a volatile market regardless what happens next, because quite frankly there is so much in the way of noise when it comes to the oil markets and the argument between production cuts and the oversupply coming out of both the United States and Canada. Expect very volatile conditions as we sort out what’s going on in the crude oil markets, but keep in mind that the Canadian housing situation is getting a bit tenuous as well.

Written by FX Empire