- The US dollar initially fell during the trading session on Monday but has seen buyers step in to pick it up near the 1.3725 CAD level.
- That does make a certain amount of sense, considering that we have seen an impulsive move higher, and I think it’s probably only a matter of time breakout to the upside.
- With this, I think you have to look at this through the prism of a market that is doing everything he can to get to the 1.39 level above, but I also recognize that the market is a little stretched at this point so it does make a certain amount of sense that we would see a little bit of a pullback.
Crude Oil
Crude oil course has an influence on the Canadian dollar, but I remind you that the United States has become somewhat self-sufficient when it comes to production of crude oil, and therefore it doesn’t have as much of an influence on this parent’s it does other Canadian dollar related pairs. Nonetheless, it can move the Canadian dollar, so do keep that in the back of your mind.
Underneath, we have significant support at the 1.36 level, it’s an area that of course had previously been resistant. I think at this point in time you have to look at it for a certain amount of “market memory” to come back into the picture, offering the possibility of a buying opportunity based upon “cheap greenbacks.” If we were to break down below there then we have to deal with the 50-Day EMA which should also be fairly supportive of the market.
In general, I like the idea of buying the US dollar against most currencies, and the Canadian dollar won’t be any different. Furthermore, as somebody who sees the Canadian economy firsthand multiple times a year, I can tell you that it does seem a bit sluggish in comparison to the US. This is especially true when looking at housing prices in the Greater Toronto Area, but it can also be seen in Montréal as well. From what I understand, Vancouver is just as bad as Toronto, if not worse. I think the Bank of Canada will have to do something to stimulate the economy later this year, and I think the market is starting to price that in as well.
Ready to trade our daily Forex analysis? We’ve made a list of the best forex brokers accepting Canadian clients to trade Forex worth using.