The US dollar fell against the Loonie, as we are looking at the range play itself out yet again.
USD/CAD
The US dollar fell against the Canadian dollar during trading on Wednesday, as we've seen oil take off to the upside, but I think that's going to be somewhat limited here, as this is not the place most traders express strength in oil these days. Keep in mind that the United States produces almost 14 million barrels of crude oil a day, so the correlation has worn down. What we do see is a market that is simply killing time above the 1.4150 level and basically fixating on the 1.42 level.
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The 1.42 level is an area that I think a lot of people will be looking to send this market back to; it's a bit of a fulcrum for price. With that being the case, this is more consolidation after a massive shot higher. Working off some of that froth makes sense.
Buying the US Dollar on Dips Near Key Support
Even if we do break down from here, I'd still be looking to buy the US dollar against the Canadian dollar on a dip with the 50-day EMA right around the 1.40 level, offering a bit of support.
To the upside, we could see this market go looking to the 1.45 level, but I think that's going to be more of a grind than anything else because we have expended so much energy to get here in the first place. I like the idea of trying to find some type of value here and there, but with the present behavior, I think you have to understand that you probably are going to be looking at this as a market that is more short-term based. I still favor the upside overall; the fundamental situation just really hasn't changed.
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