US dollar pulls back against Canadian dollar then bounces on Monday

The US dollar pulled back a bit during the trading session on Monday, but now looks as if it is trying to build up a bit of momentum. I think that eventually we will test the 1.30 level again, but it will probably take a significant amount of momentum to finally break out higher, and perhaps clear the 1.3050 level. If we clear that level, the market should continue to go much higher, perhaps to the 1.33 handle, and then eventually the 1.35 handle after that.

I do like buying dips in this pair, but I recognize that there is a lot of noise in the market and I think that the 1.2750 level underneath is the “floor” in the market. If we break down below there, the market is probably going to go much lower, perhaps down to the 1.25 handle. Overall, the oil market of course has a major influence as to where we go, and they are testing major trendlines right now. Overall, I think that the market continues to go back and forth but overall I think that the market will eventually go higher based upon not only interest rates in the United States, but I think that perhaps the oil market is getting a bit overheated. Beyond that, the Canadian economy has formed a somewhat negative impression as of late, as the Bank of Canada is likely to raise interest rates, but it is farther down the road than the United States.