USD/CAD Price Forecast – US dollar finding support underneath

The US dollar initially fell during the trading session on Thursday, reaching down to the 1.2950 level, and then bouncing. It looks as if the market is going to continue to try to grind higher, breaking above the 1.3050 level in the end. However, it’s going to take a lot of work to get above there, so I think that ultimately we will continue the “buy on the dips” situation. I think that the market will eventually break out to the upside but is going to take a lot of effort to do so, and probably some type of pullback in the oil market. Ultimately, I think that the market should be very noisy, but I think that given enough time it’s likely that the markets will continue higher based upon not only interest rate situations being so different between the economies, but again the fact that it is starting to be whispered that perhaps OPEC will pull back some of its output cuts.

If we broke down below the 1.2925 level, then we could roll over towards the 1.28 level. However, I think that the recent action suggests that it’s going to be very difficult to accomplish that, especially considering that it was formed supportive due to the gap at the beginning of the week. By breaking below the gap, that would of course be very negative. I think we are going to see a very noisy summer, which is typical for this pair during this time of year.