The US dollar initially rallied against the Canadian dollar, but found a bit of resistance near the 1.2930 level. We rolled over there, which is interesting because it was previously supportive. However, later in the day we are starting to rally again in this may be due to the oil markets struggling. Nonetheless, the 1.30 level is going to continue to be an area that should be massively resistive. Until we can break above that level, I feel that this is a market that can only be sold. If we did break above the 1.30 level, then things could change rather rapidly. Pay attention to oil, it obviously has a certain amount of influence in this market, but there are other things going on in this market as traders in the bond markets are influencing the way things are going.
In the meantime, I’m a seller of rallies and I believe that the short-term rally may be a nice opportunity to take advantage of “value” in the Canadian dollar. It appears that bond traders are still shorting US bonds well buying Canadian bonds in anticipation of higher interest rates coming out of Canada. Because of this, I believe that the market continues to find a lot of trouble, and that it’s only a matter of time before the sellers come back on any rally. If we were to break out to the upside, there is still a weekly trend line that has been sliced through as well, and that of course is something that will have to be monitored closely. The market looks likely to continue to struggle in general, but I think it’s going to be a short-term choppy back and forth type of situation over the next several days.
Written by FX Empire