The US dollar continues to be the main focus of traders, as rates in the US continue to push things around.
USD/CAD
The US dollar continues to be the main driver of where we go in the forex world as interest rates in America continue to be higher than most other economies. That being said, we are a little overstretched against the Canadian dollar and I fully anticipate that a bit of a pullback is probably in the works. The 1.3950 level has been very difficult to overcome and the fact that we got here without any red candlesticks over the last 6 or 7 days gives me more pause here as I think we probably have quite a bit of noise ahead of us.
Don’t Get Aggressive
All things being equal, I don't think this is a market that you can be overly aggressive with and I do think that it is probably only a matter of time before we see market participants try to perhaps take advantage of what might be the overextension and send this pair lower. If we do in fact see this pair breakdown from here, I do anticipate that unless the war is actually over, it is going to be difficult to hang on to any gains for the Canadian dollar. This is a market that will remain very volatile, but I'm looking at this as an opportunity to start buying dips as they give you a little bit of value from time to time, especially near the 1.3850 level, assuming we drop that far. Any drop and a bounce for me is a viable opportunity in an environment that still favors the dollar, at least at the moment, and could very well continue to do so as rates in Canada are more likely than not going to stay very low.
I don't have too many concerns about oil like I would a few years ago as the Americans produce so much oil now that it doesn't influence this pair like it once did. With that being the case, I like the idea of simply waiting and being patient enough to find some value in the greenback.