The greenback has pulled back just a bit against the Canadian dollar during the Juneteenth holiday, as the market has dipped below the 1.30 level. We are at the top of a major trending channel, so it does make quite a bit of sense that we would see noise in this area. Because of this, the market looks as if it could get a little bit of breakdown from here, assuming that the overall range sticks.
If we were to turn around to break above the 1.31 handle, then it’s very likely that the US dollar will continue to go higher, but right now it certainly looks as if a pullback is more likely than not. That being said, it’s probably worth noting that as time has gone on, we have seen plenty of buyers on dips, and it’s worth noting that the overall trajectory of the market has been higher over the long term. I don’t think that changes anytime soon, but the attitude of this market is one that has been rather steady, which makes sense considering that the two economies are so heavily intertwined.
At this juncture, if we do pull back from here, then I think the 1.29 level is an area that you have to pay close attention to because it should be crucial. If we do break down below there, then it’s likely that we fulfill the back-and-forth that we have seen for some time, and therefore I would not be surprised at all to see this market go to the 1.27 level, followed by the uptrend line underneath, currently sitting at the 1.2550 region.
As soon as we break out of this channel, then we can start to make bigger decisions, but right now the channel has been extraordinarily reliable, so there’s no reason to fight the thought process. If we break to the upside, we would need to clear the 1.31 handle and close above there on a daily candlestick for me to start buying. At that point, it’s very likely that the market continues in more of a “buy-and-hold” manner. That being said, the fact that we did pull back on a rather quiet day does make sense, as there was nothing to drive the markets in general. While there is an oil component to this care, the reality is that the market will do whatever it wants to do.