The US dollar fell against the Canadian dollar initially on Friday but found support as the Canadian CPI numbers came out less than anticipated. This works against the Loonie overall, and therefore we rallied back towards the 1.2350 level. The market is currently pressing the bottom of the uptrend line from the weekly chart, so it’ll be interesting to see if the resistance can hold. If it does, then we should roll over and go much lower. At the beginning of the day, that’s exactly what it looked like was going to happens and therefore I was prepared to start selling. However, we have seen a turnaround again so I think that the volatility continues.
If we can break above the 1.25 level, then I feel that the market will probably go much higher as it would be a complete reversal of the breakdown through the uptrend line. Alternately, if we roll through the 1.2250 level, then I would be much more comfortable shorting this pair. In the meantime, I would be a bit cautious because we not only have those levels to worry about, but we have conflicting signals coming out of Ottawa. Beyond that, the oil markets course has an influence on the Canadian dollar, so I continue to be cautious about this market, and believe that perhaps staying on the sidelines might be the best way to approach this market into the next couple of sessions. Once we get some type of impulsive move, then I would be much more comfortable either buying or selling. In the meantime, I would anticipate that we are going to see choppiness and probably nothing more extensive than that. The next couple of sessions could be very telling as to where we go next in this market.
Written by FX Empire