- The USD/CAD has fallen a bit during the trading session on Monday, continuing the big move that we had seen on Friday.
- At this point, the Canadian dollar is trading at 1.3369, and dropping.
- The downside is probably somewhat limited, especially as we approach the 1.3250 level, which is not only an area where we had seen buyers previously, but it’s also where we had seen the 200-Day EMA make an appearance.
Oil has been somewhat all over the place, but the jobs number in Canada on Friday had people getting excited. Ultimately, I think this is a situation where you have a lot of noisy behavior, and quite frankly there are a lot of problems in Canada, despite the jobs number. Canadian employment numbers do tend to be all over the place anyway, and whether they are reliable is a completely different story. We work with the numbers we’ve got, and it makes a certain amount of sense that we have seen this reaction.
I Remain Bullish
Ultimately, this is a market that I think will find buyers sooner rather than later, especially with Jerome Powell speaking on Tuesday. Beyond that, we also have the CPI numbers on Thursday, which can also cause a bit of US dollar strength if it comes in hotter than anticipated. I think that may very well end up being the case, so be aware that a surprise could cause quite a few headaches for people out there. Ultimately, this is a scenario where the market will continue to see a lot of volatility, and the more volatile markets tend to be, the more likely you are going to see US dollar buyers jump into the market as it shows risk aversion, and of course, is what you need to buy treasuries.
Rallies at this point probably have a significant amount of resistance near the 1.3650 level, and I think it’ll be difficult to get above there. It’s not impossible, but I do think it takes quite a bit of momentum to make that happen. In that area, it’s likely that we would see the 1.39 level testing, and then perhaps the crucial 1.40 level that opens an even bigger move on this chart. Ultimately, I remain bullish until we break below the 200-Day EMA.
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