USD/CAD Forecast May 2, 2017, Technical Analysis

The US dollar continues to chop sideways against the Canadian dollar during the Monday session, but I think that the upward momentum is still there. After all, the crude oil markets look very soft and that will continue to put a bit of bearish pressure on the Canadian dollar itself. Also, we are starting to see serious concerns about the Canadian housing market, which brings back memories of 2008 in the United States. Because of this, I believe that the US dollar will continue to climb, although perhaps in a very choppy manner.
Breaking above the 1.36 level was significant longer-term, and I think that the market will then find itself looking for the 1.40 level above, which is the next natural large, round, psychologically significant number. That’s not to say that we won’t have pullbacks, but I think those will be buying opportunities and that the 1.36 level should now offer significant support in a market that is used as a proxy for the crude oil markets. As they breakdown, and I think they will continue to do so, oil markets will continue to drive this pair higher, and the specter of a housing problem in cities like Toronto will also cause major issues with the Canadian dollar. The 1.35 level underneath should continue to be the point at which I would think of shorting the market longer term, as I believe that would psychologically be too much for the buyers to ignore. In the meantime, buying on the dips is probably going to continue to be how most traders look at this market. Short-term traders should love the USD/CAD pair, as it has a grind to it, but most certainly an upward bias which gives traders good trading opportunities going forward.
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