US dollar rallied against Canadian dollar in continued consolidation

Despite the bullish pressure that we had seen and crude oil markets recently, the Canadian dollar has been struggling. Most of this is due to the horrible inflation figures coming out of Canada, which of course puts downward pressure on interest rates for a currency, and that is one of the major drivers of Forex pairs. I think that we will continue to see this pair try to go higher, but I also recognize that on the longer-term charts there is a major area in the form of 1.30 above. Once we can break above there, this pair could really take off to the upside.

Alternately, if we cannot break above 1.30, then we could enter a bit of consolidation for most of the summer, something that’s not unheard of in this pair. Remember, these economies trade with each other quite extensively, so a stable currency pair is something that both countries tend to prefer. If we do get this consolidation, I suspect that we are looking at a range between 1.2750 on the bottom, and 1.30 level on the top. If we stay in that range, then it will be nice range bound trading that we can take advantage of, perhaps using something like the stochastic oscillator or a CCI indicator to fire off signals. I do believe in the uptrend overall though, so I would put much more credence into bounces that I would pullbacks. If we do break above the 1.30 level, I think that the market will probably find the 1.33 level after that.