The US dollar continues to be very volatile against the Canadian dollar, as markets look very likely to go back and forth in the short term. Obviously, this is a market that is highly susceptible to what happens in the oil markets, but I think that the reality is that money is starting to flow from North America and into Europe. This is seen in the EUR/USD pair and the GBP/USD pair as well. The US dollar and the Canadian dollar both are starting to fall against European currencies, so I think it will continue to be an issue. That causes a lot of noise in this pair, but the easiest target or signal that I see is that if we can break above the highs of the week that just closed, that would be a good sign that we are going to continue to go towards the 1.29 handle above, as it would be clearing a gap.
Otherwise, we could go back and forth in the short term, and I think we need to see a bit of clarity before putting serious money to work. It makes sense for me to wait for a sudden and serious moved to get involved. I think this is going to be a situation where we could see dollar strength, which flies in the face of most other currency pairs. Although, I would also be very cautious about putting money in large droves. I believe that taking advantage of momentum is probably the best way to go, and then adding as the market proves itself to you. If we do break down, I suspect the 1.2 level will be a floor.
USD/CAD Video 15.01.18
This article was originally posted on FX Empire
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