- The US dollar has been very choppy against the Canadian dollar during trading on Wednesday, as we continue to see a lot of nonsensical trading in the markets.
- Ultimately, this is an environment that is very difficult because it is based on the latest headline or even comment from officials, so at this point in time it’s very likely we will continue to see a lot of erratic trading.
- Markets are watching this particular pair. After all, the United States and Canada can even come to some type of trade agreement, so that will continue to cause chaos here.
Technical Analysis
The technical analysis for this pair is somewhat negative, but we are starting to slow down overall. With that being the case, the market is going to continue to be somewhat cautious.
I do believe that we will continue to ask questions of the global economy, and the fact that the CPI numbers in the United States came out a little cooler than anticipated also could have a negative effect on the Canadian economy, as Canada sends most of its exports into the United States, and if the US economy is going to slow down, that will have a detrimental effects on the Canadian economy.
With that being said, it’s a lot like having your best customer become bankrupt. I don’t think it’s quite that drastic, but it does certainly have a negative influence on the Canadian economy itself, and of course the Bank of Canada has been very loose with its monetary policy as of late, and while the Federal Reserve might be forced to cut rates later this year, the reality is that the Federal Reserve is still tight, and you still get paid to hang on to this pair to the long side.
If we do rally from here, we need to break above the 1.3750 level to continue going higher, and in that environment we might see the market test the 50 Day EMA, which is presently just below the 1.39 level anything above there could have the US dollar very bullish, but at the same time, if we were to break down below the 1.36 level, then we could see a drop to the 1.3429 handle.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
