US dollar struggles against Canadian dollar during the week

The US dollar has initially tried to rally during the previous week against the Canadian dollar but rolled over as it did against most other currencies around the world. Oil markets have been strong, so that of course puts bullish pressure on the Canadian dollar in general, and it now looks as if we are going to go testing the 1.25 level. The 1.25 level obviously is a large, round, psychologically significant number, but we have broken down below there before, so I don’t know that it will be as supportive as one would normally think.

The market breaking down below the uptrend line could open up much lower levels, and I will be watching this pair with great interest this week. However, we could also bounce from that uptrend line, and if it holds that would make yet another “higher low”, which could signify that perhaps we will try to climb. The longer-term outlook for oil seems a bit capped at the moment, as it is bullish, but it is also starting to get a bit expensive. Because of this, we could get a roll over in the oil market which would send this pair higher. I think that the longer-term trader is probably better served waiting for the weekly candle to form before placing a trade. The next week should be crucial in determining the next longer-term move.