The US dollar rallied significantly during the trading session on Wednesday, and Thursday of course has been more of the same. However, we are starting to roll over slightly, so I think we are going to get a little bit of a pullback to build up the necessary momentum to go higher. Keep in mind that we have the Nonfarm Payroll Numbers coming out during the trading session in the United States, and that of course will offer a bit of momentum and volatility. I think that short-term pullbacks should continue to offer a reason to go long, because the Bank of Canada said just on Wednesday that it is going to be very cautious about raising rates, and therefore I think it makes sense of the US dollar continues go higher as we already know that the Federal Reserve is likely to raise rates over the next several months. This should favor the US dollar, and if the oil markets continue to struggle, that’s yet another reason for this pair to go higher. This doesn’t even factor in the housing bubble that the Canadians are currently dealing with in the Greater Toronto Area.
In general, I think that the 1.27 level should be supportive, and I think that any type of bounce between here and there should be a nice buying opportunity. I suspect that if the Nonfarm Payroll Announcement comes out bearish for the US dollar, it will be temporary, and we should be able to take advantage of that dip to buy this pair.
Written by FX Empire