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US dollar initially rallies but then fails for the week against Loonie

Christopher Lewis

Obviously, the crude oil markets will make its impression on the Canadian dollar, so if they continue to show signs of strength I anticipate that this market will probably break down through the 1.2750 level and extend down to the 1.25 handle. There is a major uptrend line just below, so that does keep a bit of support underneath, and a return to the uptrend line, or at least the 1.25 level would make some sense. Alternately, if we turn around and break above the 1.30 level, the market should continue to go higher.

I anticipate a lot of noise, but quite frankly I think that it is only a matter of time before we make some type of longer-term decision. Right now, this is probably the realm of shorter-term traders, but a move above the 1.31 level could bring in a lot of fresh money for the longer-term to the upside. I would say the same thing about breaking below the uptrend line, as it would more than likely send this market looking to the 1.20 level and beyond. I think this could be an interesting pair this summer, but right now it appears that we continue to try to test this uptrend line for some type of clarity. Expect volatility and keep your position size somewhat small as this could be a market that whips around quite a bit during the summer, especially considering that oil markets tend to be very noisy then as well.

USD/CAD Video 14.05.18

This article was originally posted on FX Empire