US dollar quiet against Canadian dollar to begin the week

The US dollar has gone back and forth during the trading session on Monday, as traders came back from the weekend. It looks likely that we will continue to see a lot of choppiness in this area, but I think most of what we are looking at is a market that is trying to decide whether it wants to bounce or continue down to the more important 1.25 handle underneath. That’s an area that is massive support, not only based upon structural support, but also based upon the large, round, psychologically significant number. If we do rally from here, I suspect that the 1.2750 level will be a bit of a “ceiling” in the short term, but if we were to break above there that could change quite a bit when it comes to the overall attitude and trend.

As per usual, you will need to pay attention to the oil markets, because they have a major influence on what happens with the Canadian dollar. I believe that ultimately, the oil market will roll over but obviously we have a lot of short-term bullish pressure, so I think that we are more likely to see this market roll over than anything else. I would wait until the market decides which direction it wants to go before I put money to work, so you are probably best to sit on the sidelines for the next 24 hours.

Written by FX Empire