The USD/CAD pair initially tried to rally on Monday, but found enough resistance near the 1.3250 level to turn around and form a move lower. However, we are starting to see the 1.32 level offer a bit of support, and of course the oil markets remain jittery to say the least. Although the monetary policy situation in Canada may be changing, the reality is that this market continues to be influenced by oil. Because of this, I think there is still the possibility that we get some type of strong rally, but with the conflict between the petroleum markets influence and the interest rate situation coming out of Ottawa, it’s likely that it’s going to be a choppy market at the very least.
I believe that caution is needed in this market, as we continue to jump around. I believe that the 1.33 level above is resistance, and if we can break above that I think that the market can resume its longer-term uptrend. Longer-term charts suggest that there is a significant uptrend line underneath, so having said that, I believe that the market should continue to find buyers sooner or later. If we do get a short-term selloff, I will be paying attention oil as eventually that bearish pressure will overcome the Canadian dollar. In the meantime, it looks as if we will continue the sideways grind with the 1.32 level being a focal point for currency traders.
Written by FX Empire