USD/CAD Price Forecast – US dollar rallied slightly

The US dollar has continued to grind higher during the trading session on Monday as traders came back to work, and we continue to trade in the parallel channel. However, I do think that there is a lot of noise above and it is going to be difficult to continue to go higher. With that in mind, I like the idea of buying short-term pullbacks, as long as the oil markets could stay above the $50 level in the West Texas Intermediate crude oil market. If it breaks down below that level, I think then the Canadian dollar will get hammered and we will probably go straight up.

USD/CAD Video 18.12.18

Notice how choppy it has been over the last several months and set your expectations accordingly. I do not think that this market is going to suddenly move in one direction or the other between now and the end of the year, if for no other reason than the lack of liquidity. I recognize that the 1.34 level has caused some issues just above, but I think the real resistance is probably closer to the 1.35 handle. If we break the 50 day EMA which I have on the chart, then I think we could unwind a bit further. That would almost certainly have to come with strengthening oil prices though, which are trying to make a bottom, but again that is a reasonably dubious distinction right now as we have fallen so drastically, it’s hard to tell whether it’s a bit of a “dead cat bounce”, or it is the market trying to turn itself around over there.