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The US dollar has rallied significantly during the trading session on Monday, breaking above the 1.2560 level, an area that offered resistance on Friday. This looks as if we are going to continue to go higher, perhaps reaching towards the 1.2625 level next, and then if we can get the oil market rolling over even higher, the market should continue to go towards the 1.27 level, and then the 1.2750 level.
I believe that the oversupply of crude oil is going to be a major story and 2018, and that should eventually continue to put bullish pressure on the pair. I think that the 1.25 level underneath has the potential to be a bit of a “floor”, especially if oil markets continue to show so much bearish pressure. The fact that oil markets have rallied the way they have suggests to me that there is a bit of a “pump and dump” move going on by hedge fund traders, which through some conversations I’ve been having seems to be backed up. They are now selling crude oil, giving it over to the so-called “dumb money.” This is the typical financial manipulation that you see in the markets, but the longer-term attitude of crude oil should remain bearish because the underlying fundamentals are not strong. Americans are starting to crank up production again, something OPEC has no way to control. As the United States is now the world’s largest producer of crude oil, this will only increase bearish pressure.
USD/CAD Video 20.02.18
This article was originally posted on FX Empire