- The U.S. dollar has drifted a bit lower against its northern counterpart on Monday as we continue to see a lot of choppy but slightly negative behavior in this market.
- The U.S. dollar has drifted a bit lower against its northern counterpart on Monday as we continue to see a lot of choppy but slightly negative behavior in this market.
- We are sitting just above the 1.3750 level, an area that I think will continue to be important.
With that being said, I also recognize that this is a market that will probably slow down quite drastically this week, as we obviously have the Christmas holiday on Thursday and various bank holidays interfere not only on that day but the day after.
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So, I do think that we’ve got a situation where we may just consolidate over the next couple of days and try to sort out whether or not 1.3750 ends up holding as a floor. It is worth noting that it’s been an important level since roughly the beginning of May, so I would anticipate that it is somewhat durable.
If we can turn around and rally from here, perhaps breaking above the 1.3833 level, then it could open up a move toward the moving averages, the 200-day EMA, and the 50-day EMA near the 1.3910 level.
If we do break down below the 1.3750 level, the 1.37 level will be support, and then after that, we will probably drop about 150 pips. Keep in mind that the interest rate differential is shrinking between these two currencies, so I would not be surprised at all to see this market somewhat stabilized for a while, especially as we are heading into the holidays, so it all looks like a short-term scalping type of environment if you are a range-bound trader.
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