The dollar experienced weakness earlier in the session against its Canadian counterpart but once again, as the pair approached what has become an important support level around 1.30, the pair rebounded higher putting the spotlight on 1.32, should it get that far.
While 1.30 has been a key level of support for the last five months, only since the end of last year has the support level been tested – on three separate occasions – and followed by a series of lower highs being made. This would suggest that sellers are gaining in confidence which may begin to make the protectors of the 1.30 support a little nervous.
With 1.30 having once again been well supported today and the pair now higher on the day, attention now shifts to just above 1.32, the most recent swing high from a week ago. A failure to break above this level – thereby creating yet another lower high – would be very bearish and suggest downward momentum has picked up another notch.
A break through here on the other hand may signal a switch in favour of the bulls and signal the line in the sand has been drawn at 1.30 and for now, at least, none shall pass. Above 1.32, 1.34 becomes a notable support level which lies around the swing high prior to last weeks move.
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