The US dollar has fallen against the Canadian dollar over the last several sessions, and we are now at lower levels than we had been in the past. However, I think that breaking below the 1.27 level is a slightly negative sign and could continue to bring in sellers. I believe that there is even more support at the 1.25 handle, and that is that level that I think is most crucial for traders to pay attention to. The question now becomes whether the oil markets can give the Canadian dollar a lift, or is this simply an anti-dollar move? I think the Canadian economy eventually will weigh upon the Loonie, so if I were to short the US dollar, this isn’t the first place I would look.
There are opportunities to the short side in the short term. Longer-term, I still believe in this market if we can stay above the 1.25 handle, which for me is vital. That being said, volumes are very thin this time year so don’t be surprised if we get sudden and erratic movements. In general, the markets will be noisy, but I think we will find plenty of buyers near the 1.25 handle. Short-term, selling short-term positions might be the best opportunity that you see in this market, as a continues to be noisy and obnoxious, but overall one of the biggest problems with this market is that we have is that both economies are so intertwined.
Written by FX Empire