The US dollar fell slightly against the Canadian dollar during the Monday trading hours. The market looks likely to continue the volatility that we have seen as of late, and I recognize that the markets are testing serious resistance level above. We recently broke below an uptrend line on the weekly chart, and we now have turned around to get close to testing that previous support for resistance. I’m looking for some type of exhaustion to start selling from a longer-term standpoint, but if we were to break above the 1.24 level above, I think that the market probably goes higher. The choppiness is an indication of both central banks looking like they are trying to tighten monetary policy as we continue to see indications from both that the economies are improving.
Short-term bullishness, longer-term bearishness. I believe that into we can break above the 1.25 level, there is always going to be a threat of selling. This will be especially true if the oil markets start to rally, as the oil and Canadian dollar markets are highly correlated. Recently, we have seen volatility to the upside in crude oil, but there is a certain amount of resistance as well. Because of this, I think that the commodity markets are probably only going to have a somewhat limited effect on this pair. Obviously, there is the possibility of some kind of surprise, but currently I think that the markets are simply churning to build up momentum to make a more significant move. Until we get that, it’s likely that the markets will be choppy and difficult to navigate with any type of certainty. I believe that we will get answers, but it may take some time before we see those come to fruition.
Written by FX Empire