US dollar rallies against Canadian dollar during the week

The US dollar rallied during the week, reaching towards the 1.29 level. The 1.30 level will of course be the overall target, but it is going to take some momentum building to get above there. We have a significant amount of resistance between 1.29 and 1.30 and what I would consider to be a bit of a “zone.” I think that short-term pullbacks will continue to be buying opportunities, but ultimately this is a market that I think will show noisy proclivities. Keep in mind that the US dollar is benefiting from higher interest rates, and therefore it’s likely that we will continue to see dollar strength, especially when you look around the Forex world and see a bit of a consensus of bullish pressure.

The uptrend line underneath is of course very important, with the 1.25 level also offering major support. If we were to break down below this uptrend line, then I think that the market could unwind rather rapidly, but with the action that we have seen over the last several months, I think it’s very unlikely to happen and I believe that we will eventually break out to the upside as not only do we have higher interest rates coming in the united states, but we also have soft inflationary figures coming out of Canada. Beyond that, we also have the possibility of trouble coming out of the housing market, which could have the central bank acting in a very dovish manner.