The US dollar has rallied a bit during the session on Monday, as it is bouncing from an important level previously. This is a market that I continue to look at from a short-term perspective.
USD/CAD
The US dollar has rallied against the Canadian dollar to continue the recovery that we started to see on Friday during the Monday session. This is a market that has recently tested a significant support region with the 1.3550 level at the beginning of it extending all the way down to the 1.35 level.
While I don't necessarily think this is a career defining trade, I do recognize that it is a simple sideways trade that I think a lot of people will continue to look at in the prism of a market that quite frankly has been noisy, but I also recognize it is one that has been well defined from the longer term standpoint of both support and resistance.
Market Outlook and Volatility
I think eventually we go looking at the 1.37 level, which is an area that I think due to market memory and all of the behavior previously should remain important. If we break above there, then we will challenge the 1.3750 level and possibly beyond. This area should be an issue, but if we can get beyond there, this pair could really break higher.
But it is worth noting that the market continues to see a lot of volatility and choppiness, but overall I do think this is a scenario where traders will be trying to figure out whether or not the US indices and US interest rates continue to propel the dollar higher in general or if fear about the oil supply gives a little bit of padding to the Canadian dollar. While this isn’t the premier pair to trade when oil rises, it does offer a bit of support to the Loonie in general.