The US dollar rallied significantly during the day, and then pulled back to test the lows of the session again, and then rallied again on Thursday to break above the 1.29 handle. If we can continue the run to the upside, I think that the market will eventually go looking towards the 1.30 level above, which is the next large, round, psychologically significant level. I think that level will offer a bit of resistance, but quite frankly I don’t see why the market will be a way to go far above there, and perhaps continue to go much higher over the longer term. The US dollar will get a boost if Congress can pass some type of tax bill, and of course if the oil market rolls over, it’s likely that we will see the market go higher, as the Canadian dollar will struggle.
Alternately, if we break down below the 1.2850 level, that would be a very negative sign, and should send the market down to the 1.28 level next. I think a failure of Congress to pass tax reform is the one thing that would probably send this pair lower. In general, I do believe the market continues to offer plenty of opportunities going forward, and as we get closer to the end of the year, it’s likely that the liquidity and volume of course will drop. Ultimately, that should be a major influence on the market as well, as we will probably see sudden moves the closer we get to the holidays. I do favor the upside in general.
Written by FX Empire