The US dollar initially tried to rally during the trading session on Monday, but then broke down through the 1.2750 level. The market looks likely to go down to the 1.27 level, an area that should be supportive. If we can break down below there, then I think that the market goes down to the 1.25 handle. Ultimately, this is a market that is highly leveraged to risk appetite and of course crude oil, so keep that in mind. The oil market rallying will continue to push this market lower, but of course the opposite can be said. It’s likely that the “risk on” situation should continue to push this market lower, and I think that if you pay attention to the stock markets and should continue to notice some type of positive correlation between the Canadian dollar in the stock market, as the US dollar falls in times of risk appetite.
The alternate scenario is that oil roles over, and the market then breaks above the 1.2825 handle. If it does, the market should continue to go higher, perhaps reaching towards the 1.2925 level after that. After that, I suspect that we continue to go to the 1.30 level. However, that doesn’t seem to be the case right now, as we continue to dance around this general vicinity with a slightly negative tilt. The market is one that should probably be traded in little bits and pieces, as it is very volatile. I believe that adding once the market proves the position correct, you can start adding. However, be very cautious with wet looks to be a very choppy market.
Written by FX Empire