The US dollar has rolled over a bit during the trading session on Wednesday, reaching towards the 1.2625 handle, but then bouncing slightly. I think that surprisingly positive Canadian numbers recently have helped this market, not to mention the fact that the oil markets have rallied a bit. However, I believe that the rally in oil is probably somewhat short term, so I suspect that we are going to find a lot of support near the 1.25 handle below, as it is a large, round, psychologically significant number. It is also a structurally supportive area as well, as we have seen both support and resistance at that level previously.
If we were to break above the 1.27 handle, then I think the market has sufficiently turned around enough to start buying. After that, the market should go to the 1.28 level after that, and then eventually the 1.30 level. Oil of course will have it say, so pay attention to what’s going on as we have seen a significant amount of bullish pressure lately, which of course is good for the Canadian dollar. However, the market roles over, that will turn this market right back around and send this pair much higher.
I believe that longer-term, we have serious problems in Canada that will eventually show themselves in the currency markets. Right now, it looks as if traders are willing to ignore the housing bubble and general debt issues in the Canadian economy.
USD/CAD Video 28.12.17
This article was originally posted on FX Empire
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