The US dollar has been very choppy during the session on Thursday against the Canadian dollar, drifting just a bit lower. However, we have clear the 1.27 level over the last several days, and that is a very bullish sign. I think that the 1.28 level above being broken to the upside would be a very bullish sign and have me throwing more money into the market to the upside. This will be especially true if the crude oil market roles over, which looks likely to do as we continue to have supply issues. If the crude oil markets fall significantly, this market should rally in reaction. The 1.30 level above will of course be a certain amount of psychological resistance, but eventually I think we go beyond there. Canada has several issues, not the least of which is a major housing bubble. The recent rate hike coming from the Bank of Canada was an attempt to let the air out of that bubble slowly, but that typically doesn’t work out. Because of this, I believe that the US dollar with the central bank behind it raising interest rates will continue to climb.
If we managed to break down below the 1.2650 level, then I think the market could go down to the 1.25 level, as it is a major support barrier. The markets continue to be very choppy, but that’s normal for this currency pair, as the 2 economies are so intertwined, and of course that leads to a lot of back and forth. Overall, I believe that we continue the longer-term uptrend that had recently seen such an impulsive move to the downside. The volatility will only increase, as traders are feeling a bit exhausted from the rallies in the stock market, and if those pullback it typically helps the US dollars as well.
Written by FX Empire