The US dollar went back and forth during the trading session on Monday, as the Canadian dollar continues to be somewhat range bound and the 1.2850 level later in the day. The explosive moved to the upside on Friday will probably cause a bit of exhaustion, but eventually if we can break above the 1.29 handle, I think that the market is free to go looking for the 1.30 level after that. I believe that the crude oil market will of course cause a lot of volatility as well, which is not surprising, considering that the Canadian dollar is highly influenced by that commodity. In fact, most traders use it as a proxy for the futures market.
In general, I believe that the US dollar will continue to strengthen based upon not only in oversupply of crude oil, but various concerns in the Canadian economy, including a housing bubble and of course the central bank looking very likely to sit still in the near term. Because of this, I think that the pair continues to be very noisy, but with an upward trajectory overall. This will be especially true if the Americans do past meaningful tax legislation, as it should give a boost for the greenback overall.
Once we break above the 1.30 level, I think that the market will probably go looking towards the 1.35 handle over the next several weeks, and that is my plan for early next year. I don’t know if we get a major breakout between now and then, but I certainly think that by the time 2018 rolls around we should be above.
Written by FX Empire