The US dollar has been sideways during the Wednesday session as we await the Federal Reserve statement, but any signs of hawkishness out of the Federal Reserve will more than likely send this pair towards the 1.30 level given enough time. I think if we break down below the 1.28 level, mainly in reaction to a slightly dovish Federal Reserve, then we will try to find support at the 1.27 handle.
Unlike many other currencies, there are a lot of concerns when it comes to the Canadian dollar the go beyond the Federal Reserve or even tax reform in the United States. Oil of course has its major influence as it typically does, but at the end of the day it’s likely to also have some kind of problem with the Canadian housing bubble, which is becoming bigger by the day. With this in mind, I believe that eventually we break out above the 1.30 level and go much higher. However, do not underestimate the ability of Congress to drop the ball on tax reform, and that could change things drastically. I believe that short-term pullbacks are buying opportunities in this market, and it’s not until we break down below the 1.25 level that I would be concerned about any type of uptrend that we may be trying to form. If that’s the case, it will probably come in a general US dollar selloff anyway, so by then I will probably be short of the US dollar another pairs.
Written by FX Empire