Dollar continues to chop sideways against Loonie

The US dollar continues to chop around against the Canadian dollar and a 100 PIP range, as the market has struggled to find direction. I think that the market will continue to struggle with the 1.29 level, as it is a lower part of a massive barrier in the form of the 1.30 level. I think that range being broken to the upside would be an extraordinarily bullish sign, as the area giving way is a major barrier for the US dollar to overcome. I think that a break above the 1.30 level sends this market to the 1.35 handle.

Pullbacks at this point should continue to find plenty of support at the 1.28 level, and the 1.2750 level after that. Market participants will continue to pay attention to interest rates in the United States, especially the 10-year treasury note. As interest rates climb, that should push this market higher, and of course the oil markets have a lot of influence on the Canadian dollar, as the CAD is a proxy for petroleum.

I believe that the market should continue to be very choppy and perhaps even influenced by the Canadian housing bubble, but I believe that the US dollar is going to strengthen over the summer, so I look at pullbacks as short-term buying opportunities. In the meantime, I like buying this market at 1.28, and selling near 1.29, at least until we break out of the range, and I would use the stochastic oscillator as part of a nice range bound trading system.