- The USD/CAD has pulled back just a bit during the trading session on Monday, as we continue to see a lot of noise.
- The market is moving right along with the oil market, and as oil rose slightly during the trading session, the Canadian dollar was a little bit of a beneficiary.
- However, it should be kept in the back of your mind that the Canadians have a lot of issues of their own, so it’s probably somewhat short-lived.
The 50-Day EMA underneath should offer a certain amount of support, as it is hanging around the 1.35 level. The 1.35 level is an area that will attract a lot of attention because of not only the moving average, but the fact that it has both been supportive and resistant recently. If we were to break down below there, then we have the 200-Day EMA at the 1.32 level, an area that has been important as well. I suspect that it is probably only a matter of time before the buyers return. You will have to not only pay attention to oil, but the fact that the Canadian economy must deal with a housing bubble being popped, and therefore it’s likely that we would see the Canadian dollar suffer as a result.
Choppiness Ahead
I believe that at this juncture, we are going to see liquidity start to disappear, so that is likely to be a situation where we will see the market just go back and forth in relatively listless trading, as most traders will not want to put huge positions on. In fact, we may end up carving out a bit of arranged right around the 50-Day EMA between now and the end of the year.
However, if we were to take out the 1.38 level to the upside anytime soon, that could kick off a move to the 1.40 level, however unlikely that it is. With this being the case, I think you get a situation where we continue to see a lot of choppy and sideways action more than anything else. That will not be anything particularly unique about this market, as I believe most markets will probably do the same thing unless, of course, we get some type of shock announcement.
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