The US dollar has been very noisy during the session on Tuesday, reaching down as low as the 1.26 handle. Now that we have seen a move to the upside, looks likely that we will make a run towards the 1.2725 level. A break above there should send this market much higher, perhaps reaching towards the 1.2850 level. The oil markets of course are going to be important for the value of the Canadian dollar, as they always are, and this pair will move inversely over the longer term. If we do rally from here, I suspect that we will not only reach the 1.2850 level above, but will then continue to go much higher, perhaps reaching towards the 1.30 level next.
The marketplace continues to be very noisy, but that’s not necessarily uncommon when it comes to this pair, as the 2 economies are so highly intertwined. If we were to break down below the 1.26 handle, at that point I think we would go looking towards the 1.25 level, which of course is psychologically important. A breakdown below there could send this market as low as the 1.20 level after that. Ultimately though, I believe that the US dollar rallies based upon several things, not the least of which will be tax reform in the United States, and higher interest rates coming soon. On the other side of the equation, oil markets are going to continue to be very noisy and difficult to deal with, so I think it will weigh upon the Canadian dollar and of course the housing issues in Toronto could flareup at any moment, causing more concerns with the Canadian dollar.
Written by FX Empire