USD/CAD Price Forecast – US dollar rallies against Canadian dollar in fear trade

The US dollar has initially gone sideways during the day on Friday, but then broke above the 1.3150 level in a significant move higher considering how overextended we were to begin with. The 1.30 level underneath is massive in its importance, and I think that the 1.30 level underneath should be thought of as a bit of a “floor” in this market. This pair has a lot to think about right now, not the least of which will be the interest rate differential between the United States and Canada, and that should continue to favor the greenback overall.

If we did break down below the 1.30 level, that would be a significant turn of events, and have the market falling rather drastically. However, I think that is very likely that the market will continue to the upside eventually, although we certainly need to find some type of value to get involved. At this point, I suspect that this market is going to go to the 1.33 level above, and then possibly even the 1.35 level by the end of summer. Pay attention oil prices, they obviously have a significant amount of influence as we have inventory numbers coming out, and of course the summer driving season typically helps oil as Americans consume more, but this year seems to be a bit different. At this point, I believe we also need to start paying attention to the housing situation in Canada which has been in a bubble for several years.