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Oil pares losses as traders anticipate Israel's response to Iranian attack

USD/CAD forecast for the week of January 2, 2018, Technical Analysis

Christopher Lewis
Updated
The US dollar fell significantly against the Canadian dollar during the week, reaching down towards the vital 1.25 handle. Because of this, we may have a very interesting week ahead of us.

The US dollar gapped slightly lower at the open of the week, and then fell towards the 1.25 level. This is an area where I think we are going to see a lot of questions asked, and I think that we will eventually get an impulsive move that we can follow. At the end of the week though, it certainly looks as if there is a lot of selling pressure, so it looks as if we are going to continue to see interest in shorting the US dollar. This also is seen against other currencies, so although I am a bit concerned about the Canadian dollar longer-term, I believe that we are going to continue to see it do better than the greenback.

However, if we were to bounce from the 1.25 handle, that could be a bullish sign and could send this market looking towards the 1.29 level after that. A breakdown below the 1.25 handle as this market looking for the 1.20 level underneath, which I think is much more supportive, and could be an attempt to find buyers yet again. Pay attention to the oil markets, they look very bullish, but I think it isn’t going to take much to get them into an overextended situation, and that could be a reason for this market to rally as well. A breakdown below the 1.20 level would be extraordinarily negative for this pair, but not something that I expect to see easily done. Volatility is the name of the game, but with the jobs number coming out later this week, this could be an interesting pair to be involved in. Keep in mind it might be quiet for the first few days.

USD/CAD Video 02.01.18

This article was originally posted on FX Empire

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