US dollar rallies against Canadian dollar during the weekThe US dollar fell as low as the 1.25 region during the week but bounced enough to show signs of life. On Friday, we guide a very negative outcome when it comes to the CPI numbers coming out of Canada, so this only exacerbated the upward momentum.
The US dollar has initially fallen during the week but found enough support just above the 1.25 level to turn around and rallied again against the Loonie. This is a very bullish sign, as we found support before we got to the up-trending line that has been so important. By looking at this market, it looks likely that the US dollar will continue to go higher, and I find this interesting considering that the oil markets have been so bullish as of late. I think we are starting to see cracks in the Canadian economy, so perhaps we will focus less on petroleum and more on Canada.
I believe that the 1.2750 level will cause a bit of resistance, but more than likely we will go towards the 1.30 level after that. The uptrend line underneath continues to offer support from what I see, and we may be able to move the perceived “floor” in the market to the 1.25 handle soon. I believe in buying dips, and I believe that we are trying to hang on to what has been a strong move to the upside, even if we did sell off rather viciously a few months ago.
If we were to break down below the uptrend line, that could unwind this market to the 1.20 level rather quickly. However, I think the American dollar is starting to make a stand here, and therefore I prefer buying overselling, at least until that uptrend line is proven shattered.