US dollar drifts a bit lower against Canadian dollar on Monday

The US dollar has drifted a bit lower during the trading session on Monday, reaching towards the 1.2750 level again. I think that if we break down below the 1.27 handle, the market is very likely to go down to the 1.25 level next. Otherwise, if we break above the 1.28 handle, the market probably goes to 1.30 level. This is a market then should continue to be very noisy in this general vicinity, and of course there are a lot of different moving pieces. The US dollar of course is seen a bit of a resurgence due to higher interest rates over the last couple of weeks, but Monday was negative for the greenback.

I think that if oil starts to rally again, that could put more downward pressure on this market, but pay attention to the 10-year treasury note in the United States. If interest rates fall there as well, then that would be the “double whammy” to send this market lower. I do believe that the US dollar has a lot more going for than the Canadian dollar, but at this point it’s obvious to me that the 1.30 level above has been massive resistance and has been an area of noise for quite some time. If we did manage to break above the 1.30 level for a significant amount of time, the market should continue to go much higher. Otherwise, I think what we are looking at, and this is my base case scenario: a very noisy bank and for the summer with a slightly upward proclivity.