The US dollars had a very choppy session during the day on Tuesday in general, and of course it won’t be any different against the Canadian dollar. Adding more fuel to the fire is the fact that the Crude Oil Inventories announcement comes out during the day today, so I think that the market is simply trying to position itself in anticipation of the potential volatility that we will see. The 1.36 level continues to be very important as far as support is concerned, so I think that we will see this market test that level several times over the next several hours. Ultimately though, I do not think that you can place a position in this market until after that announcement comes out, and even if we break down below there, it’s likely that the market will have a massive reaction in one direction or another after that announcement, so I advise staying away from this pair until we get the figures.
Tight trading range
As I write this, we are essentially trading between the 1.36 level and the 1.3650 handle. It’s difficult to get overly excited about this market until we get some type of significant impulsive move, and I think we’re going to have to see something out of the announcement to have that happen. In the meantime, I am standing on the sidelines but I recognize that short-term traders may be interested in scalping this pair although it seems to have more of a downward bias in the short term. Going back and forth might be the best way to trade this market, but I recognize that you will probably get opportunities in both directions. Once that announcement comes out, I believe following the impulsive move is probably the best way to go.
Written by FX Empire