The US dollar has fallen again during the trading session on Thursday against the Canadian dollar, as we continue to pressure the $1.20 level. If we can break down below there, it could kick off another big move to the downside as this downtrend seemingly continues to run full steam ahead. This is interesting that we have seen this negativity during the trading session on Thursday, even as the crude oil markets fell. In other words, this is purely about the US dollar and not so much about the commodity at this point. Whether or not that changes could be a completely different story, but I do find its interesting to point that out.
If we were to break down below the 1.20 handle, then it is possible that this market could go looking towards 1.18 level rather quickly. That is an area that was also supportive in the past, going back to the monthly charts. The market breaking down below there really opens up the situation where we could go much lower. This is probably more likely than not the case, because the US dollar cannot get out of its own way. This is not to say that we can get the occasional bounce, but those will more than likely be sold into. I would not even entertain the idea of going long until we break above the 1.24 level, something that does not look very likely to happen anytime soon. That being said, I think that the market will continue to see volatility, and I think we would be looking at an opportunity to short if we can form some type of exhaustive candle on a bounce to get short again.
We would need to see some type of major change in the overall attitude of markets to see this market go higher for the longer term, as the US dollar is a significant safety asset in times of uncertainty. I would need to see some type of major shift in attitude of all markets to really get involved to the upside and start holding on to the greenback. It is worth noting that we are getting relatively close to a major area of support on the monthly charts, but we need some type of reason to make that hold.
