A number of investors have asked me if the US dollar has moved up too far, and if the CDN dollar has, consequently, been oversold. My answer to this question is this: Unless something drastic happens to change things, the USD is likely to continue moving up, and the CDN $ is likely to continue falling. We can look at the USD vs. a basket of world currencies, and then the CDN vs. the USD to see why I feel this way:
US Dollar: above chart
From the USD perspective, we can see a significant breakout of the greenback through 87.50 vs. a basket of world currencies. The chart above shows us a near termed target of 92.50. Should that level be breached, there is a fairly strong chunk of resistance between 99.00 and 102.50. It is to be seen if that level will be hit. Ultimate upside looks to around the old highs of 120.00. That would be a move to talk about!
CDN Dollar: chart below
The CDN loonie has an extra challenge vs. other world currencies, who are already battling the worldwide strength of the greenback. The loonie, as you know, is very much a commodities – linked currency. And that is bad news for Canadian currency holders. I’ve been talking about the longer termed commodity cycle on this blog for a very long time now (I’ve been bearish since 2011, when I suggested that commodities were entering into a major bearish cycle). The loonie recently broke support at 92.50, then 89.00 recently. Targets are 78.00 and 74.00 at this time.
Brooke Thackray’s seasonal video covering seasonality for the dollar: https://www.youtube.com/watch?v=qqyV_RXpkJc
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