- The US dollar rallied quite nicely during the session on Wednesday as we continue to see a lot of back and forth against the Canadian dollar near the 1.3750 level.
- So, this is a market that I find kind of interesting because the US dollar softened against quite a few currencies.
- It did not against the Canadian dollar. So that is something worth paying attention to.
If we can break above the 1.3750 level, then the 50 day EMA will come into the picture as potential resistance. Anything above there could open up a bigger move to the 1.39 level. This could also be a reaction to a US dollar recovery in the markets.
Overall, the Dollar Wasn’t That Strong on Wednesday
The dollar did fairly well against a couple of currencies, but there were other ones such as the Euro that seemingly are ready to go much higher. In general, I think this is a situation where we have to recognize that we are entering a very volatile market. And it is worth noting that this pair does tend to be very choppy. We did have a significant sell off, but then we are now in a major area of potential support.
It is because of this that I’m watching this particular pair because it may buck the trend, and it may see people jumping in to pick up US dollars. The interest rate differential favors the US dollar. So of course, you get paid to hang on to this pair as choppy and slow and grinding as it may be overall. If we break down below the 1.3550 level, then we could see a move down to 1.3427. But right now, that doesn’t look likely as the market has been so noisy and hesitant to drop significantly.
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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.
