The US dollar has gone sideways against the Canadian dollar over the last 24 hours, after initially dipping at the open on Monday. The market looks very likely to hang about this area, as we are watching both oil markets and of course the Federal Reserve. The Federal Reserve’s statement coming out on Wednesday will be crucial, because it could give us a glimpse as to how many interest rate hikes are coming this year. There is a hot debate on Wall Street right now as to whether it will be 3 or 4, and that will greatly influence where the greenback goes next.
If the Federal Reserve raise interest rates 4 times a year, that will almost certainly be positive for the US dollar overall. Alternately, if it’s only 3, then that could cause a bit of a greenback selloff, because it’s a “known known.” Because of that, I think that the next 24 hours might be a bit difficult, followed by a scene of massive volatility. In general, I prefer buying this pair because I do believe that fundamentally the US is much stronger than Canada right now, but we may get a short-term pullback. I would anticipate the 1.30 level to be support, and that any approach towards that area could offer value the people are willing to take advantage of. I also recognize the 1.32 level as being short-term resistance and perhaps even the target.
Written by FX Empire