The US dollar initially tried to gain on the Loonie, but failed to hang onto gains, as the world continue to move on the latest headlines coming out of the Middle East.
USD/CAD
The US dollar initially tried to rally against the Canadian dollar on Monday but has given back the gains to go negative. With that being the case, we continue to see quite a bit of downward pressure, and as I am analyzing this pair, it's worth noting that the market breaking down below the Friday hammer would open up the possibility of a drop down to the 1.3550 level.
The 1.3550 level is an area that begins a significant support level that extends to the 1.35 level, and as a result, I think you have to look at this through the prism of a potential floor in the market being tested again. If we turn around and break above the high of the day for Monday, that could open up a drive towards the 50-day EMA, but it's pretty obvious that we are going to continue to see a lot of trouble in this market as long as we continue to see the crude oil market fairly strong.
The Range-Bound Outlook
Most traders will continue to see this as a market that is range-bound from a longer-term standpoint, with the 1.35 level being the floor and the 1.40 level being the ceiling, and ultimately, I think that's the path we take.
Nonetheless, it's very likely that we see a lot of erratic movements based on oil headlines, but as things stand right now, I think it's probably more likely than not we will continue to drift lower. The US dollar has been pushing back against multiple other currencies, but the Canadian dollar seems to be quite a bit more stubborn than many of its contemporaries.