US dollar rallies against Canadian dollar from major support

The US dollar has rallied significantly from the 1.2750 level, an area that has been supportive more than once. I believe that bouncing from there is a very bullish sign, and I think that holding that as support is something that was necessary. I think that if we can break above the 1.28 handle, the market will probably then go looking towards 1.29 level and then eventually the 1.30 level. Short-term pullbacks should continue to be nice buying opportunities, and I believe that the 1.2750 level extends down about 20 pips for a “zone.”

Expect volatility, but I think the interest rate situation in the United States has more to do with where this pair goes than oil for a change. Oil markets had rallied rather significantly during the day, but that was not enough to help the Canadian dollar, which has been something that we have seen a couple of times. Ultimately, I think that eventually we could go looking towards 1.30 level, an area that is massive resistance and of course has a major effect on the psychology of the market. By clearing that level, we could go much higher, perhaps reaching towards the 1.3250 level. The alternate scenario of course is that we break down below the 1.2725 handle, and then I think we could drop as low as 1.25 handle over the longer-term. Ultimately though, I do believe that we are going to have a significant amount of strength in the US dollar.