The US dollar initially tried to rally against the Canadian dollar but found enough resistance at the 1.2875 level to roll over. It now looks as if we are going to go towards the 1.28 level underneath, and a move below there is possible as well. Longer-term, I still believe that oil markets are probably going to struggle, and therefore put upward pressure on this pair. However, in the near term it looks obvious to me that the market is probably going to continue to see bearish pressure. I believe that eventually we could be looking at roughly 1.2750, an area that I think could bring in value hunters.
Alternately, if we do turn around and break above the 1.29 level, we will go crashing into the 1.30 level again, an area that has been important more than once. In fact, when you look at longer-term charts the 1.30 level has been crucial more than once on the monthly chart as well. Because of this, I think that if we can break above the 1.30 level, it will be a huge signal that we are going to go much higher, although I do see a lot of noise between the 1.30 level and the 1.33 handle. That would almost certainly have to coincide with some type of breakdown and oil markets, which although I do expect, I believe it will be more orderly in the short term, keeping the possibility of an explosion to the upside a bit low.
Written by FX Empire