USD/CAD roles over a bit on Tuesday

The US dollar has rolled over a bit against the Canadian dollar after initially trying to rally on Tuesday but found the 1.2925 level to be a bit resistive. We pulled back from there to reach towards the 1.2825 handle, but I think that the market continues to chop around a bit. Ultimately, I think that we are trying to build up enough momentum to try to break above the 1.30 level, but it’s going to take a significant amount of momentum to make that happen. If we break down below the 1.28 level, then we could go down to the 1.27 level after that.

Keep in mind that the oil markets have a significant amount of influence on the Canadian dollar, as this pair will typically bounce when oil falls, and of course vice versa. I also recognize that the 1.30 level above will have a certain amount of psychological resistance tied to it, so don’t be surprised if it takes several attempts to make that happen. As far as falling is concerned, I would assume that we should have a bit of a floor near the 1.25 handle, as it is a large, round, psychologically significant number.

No matter what happens, expect a certain amount of volatility, I think that is typical with this pair anyway, and of course as we have concerns about a potential trade war, which has a significant influence on commodity markets, and of course commodity currencies such as the Loonie.