The US dollar went sideways initially during the session on Friday, but then broke down rather significantly as the Americans missed the expected jobs number. By doing so, this favored Canada, and we course rolled over. Even with this, I believe that the pullback that looks likely to happen is going to be short-term overall. I think that the 1.25 level underneath should be massively supportive, and that dips between now and then will more than likely offer buying opportunities. If we do rally from here, the 1.30 level will be very difficult, as it was massively resistive. Move above there should send this market to the 1.3250 level. Overall, the US dollar should continue to strengthen due to the Federal Reserve looking likely to raise interest rates several times over the next year, but in the meantime, I think that we are paying more attention to oil and jobs.
The market should continue to be very noisy, but I think that if you start to trade this market with very small positions, you can add if the market goes in your direction. Overall, I think that the 1.30 level being broken is a longer-term “buy-and-hold” signal, which is what I believe will happen given enough time. At that point, I would be much more aggressive. I think that we will continue to see the market bounce around between the 1.25 and 1.30 level above. In the short term, I think we can probably take a small position to the downside, but would be stunned if we break down below the 1.25 handle. In general, this market is probably going to end up offering value at lower levels. It comes down to your time horizon, but if you are short-term trader, you might be able to take advantage of this short-term situation.
Written by FX Empire