The candlestick for the trading session on Tuesday was rather neutral, so that at least is a relatively stabilizing factor, perhaps even a bullish sign.
The US dollar went back and forth during a choppy trading session on Tuesday as we continue to hang around the 1.26 level. This is an area that I think will continue to be important, especially as there is a huge cluster underneath that level that extends down to the 1.25 region which has been important multiple times.
It is worth noting that the 200-day EMA is sitting just above the 1.2647 level. That is an area that would be resistance, but if we can break above there then it could open up more US dollar strength. Keep in mind that the crude oil markets have been very strong in general, but they have also been very noisy. This almost certainly will have an effect on the Canadian dollar.
Another major factor in the strength or weakness of the Canadian dollar is that the federal government has destroyed its own budget, much like the Americans did a few years back. Because of this, it will be interesting to see this play out, but if oil does start to roll over again, that should send the US dollar much higher against the Loonie. Because of this, the market is going to continue to see a lot of factors pushing this market back around, so obviously we are going to see a lot of choppiness.
If we do break above the 200-day EMA, it is possible that we could go looking towards the 1.27 level, where the 50-day EMA currently sits. Breaking above there could then send this market towards the 1.29 level, an area that has caused a bit of resistance in the past. I think you will continue to look at this market trade in a bit of a range, as marked on the chart. I do not necessarily believe that this market is ready to break out, but if we did slice through the 1.2450 handle, this market could fall apart and go looking towards the 1.22 level, followed by the 1.20 level rather quickly. The candlestick for the trading session on Tuesday was rather neutral, so that at least is a relatively stabilizing factor, perhaps even a bullish sign. Obviously, we need to get a little bit of follow-through to make that happen. The choppiness should not be overly surprising though, as these two nations trade so much.