- The U.S. dollar rallied significantly against the Canadian dollar during the trading session on Wednesday as we are now above the 1.3850 level, an area that previously had been difficult to overcome.
- With that being said, the longer-term charts are very much looking like a consolidation market just waiting to happen.
- Overall, I think we've got a market that is trying to get back to the 1.3950 level, which is an area that began a massive amount of resistance all the way to the 1.40 level.
Market Outlook and Risk Appetite
Overall, I think this is a pair that does in fact get down there, but I also recognize that this is a market that is going to continue to be very noisy overall and I think you have to look at this as an opportunity to buy cheap U.S. dollars anytime we pull back.
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I've got no interest whatsoever in trying to get too cute here. I think ultimately, we have a situation where traders are trying to run it up to the 1.40 level and then we'll probably try to run it back down. This would simply confirm the overall USD/CAD range that has been so important.
This range has been in effect all year and despite the fact that oil prices are a little higher, this is more or less a feature of risk appetite overall and I think that will continue to be the game being played here. If we get closer to the 1.3950 level and interest rates in America drop, that might be your signal to start shorting again.
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