Today's potential signal:
I am a buyer of this pair ONLY. I am interested in a small position near the 50-Day EMA. I would have a stop at 1.3475 below. I would be aiming for a bounce back to the 1.36 level.
- The US dollar initially tried to rally a bit during the early hours on Tuesday only to collapse a bit against the Canadian dollar.
- That being said, we are very much still in a consolidation phase, so I'm not overly pressed about this.
- I think we continue to see more buy on the dip behavior, but it is a bit of a grind.
This does make a certain amount of sense considering that the two economies are so heavily intertwined. Anybody who's ever been to either the peace bridge or the ambassador bridge between the two countries can see just how much trade there really is. It's actually kind of an impressive sight. With that being the case, you don't get massive swings very often, unless of course somebody is caught offside. As things stand right now, crude oil is rallying a bit.
Oil? Not Necessarily.
But I don't think that is going to be a major driver of this USD/CAD pair anytime soon. Keep in mind that the Americans produce a lot of crude oil now, so although it can't help the Canadian dollar, it doesn't necessarily translate the same way against the greenback. The 50-day EMA underneath continues to be a technical support level right along with the 200-day EMA, so I do think it's probably only a matter of time before buyers would show up in that general vicinity.
It would continue the overall up trending channel that we've been in for a while. The 1.3625 level is still an area that I'm paying close attention to because if we can close up there on a daily chart, I think then you have a real shot at going to the 1.38 level. The CPI numbers coming out on Wednesday could have a lot to say as to what happens in this pair next, but keep in mind, it just tends to grind more than anything else, so you're not looking for massive moves most of the time.
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