The US dollar has rallied significantly during the trading session on Tuesday, as the 1.28 level continues to offer support. However, as the Americans stepped into the arena, it looks as if the US dollar may revisit that level as we can’t keep gains. In the short term, I believe that we continue to consolidate between the 1.28 level on the bottom, and the 1.29 level on the top. Obviously, this is a very messy range, so I think that you will need to be very cautious when trading. However, I think that the market continues to be very noisy, so paying attention to the crude oil market will be vital as the Canadian dollar is a proxy for that.
The 1.30 level above is a target, but we would need to see some type of sell off in the WTI Crude Oil market to see that happen. The alternate scenario of course would be a major “risk off” event as well, but right now it looks as if we are trying to form a bit of a base, but we don’t have enough momentum to pick this market up. If we break down below the 1.28 level, then we could see this market go down to the 1.26 handle. I think regardless what happens next, this is going to be very noisy market, and of course it is going to be very difficult to trade at times. I think that we need to see some type of impulsive trading session that closes with a long daily candle to start putting significant amounts of money to work.
Written by FX Empire