The US dollar fell during the trading session on Wednesday, breaking below the 24-exponential moving average on the hourly chart against the Canadian dollar. We are testing the 1.27 level, and I think at this point that level needs to hold, otherwise we are going down to the 1.25 level to find support. I believe that this market should continue to be very volatile, and of course the oil markets will have a certain amount of influence as well. I think that the market continues to be very choppy, but I do prefer the longer-term move to the upside. Oil will be capped soon, as we will most certainly see an oversupply of crude oil coming out of North America to fill any gaps. In fact, OPEC is already starting to complain about it.
As long as we can stay above the 1.27 level, I think that any type of bounce or an impulsive move to the upside should continue to offer a nice opportunity to pick up a bit of value, and perhaps watch this market try to go to the 1.30 level, an area that of course will attract a lot of attention in general. If we can break above there, then the market should continue more of a “buy-and-hold” attitude, perhaps reaching towards the 1.40 level after that. I believe that every time we pull back, there should be a buying opportunity, unless of course we were to break down below the psychologically important 1.25 handle, something that would take a bit of work to do. Ultimately, with the US Dollar Index breaking out of an inverse head and shoulders, I believe that the US dollar is getting ready to strengthen rather drastically, especially considering that stock markets look a bit “toppy.”
Written by FX Empire