This pair will often trade sideways mainly because the two economies are two intertwined. This makes sense as the economies essentially have an open border. The market can sometimes move with crude oil, but this is less of a factor these days as the United States is now the biggest producer of crude oil in the world. The Canadian dollar, of course, gets a boost against other currencies, but not always against the greenback.
The 1.35 level causing a bit of trouble would make sense, as it is a ‘500 pip’ number, which often brings a lot of order flow. As you can see, we couldn’t break through it, and now it looks like pullbacks are to be expected and can even be used to enter the market for short-term long positions. We don’t necessarily like the idea of going short, at least not until we see some kind of major issue with the US dollar itself – and around the world. A breakout could be a big deal
If the pair breaks above the 1.35 handle, and especially if it is on a daily close it would be a great sign of strength. At that point, another 100 points would be expected. On the downside, if we break below the 1.34 handle, we could see another 100 points lower come into play. Either way, tight trading is expected.