The US dollar rallied a bit against the Canadian dollar on Monday, as the 50-day EMA seems to be offering a bit of support. That being said, the 50-day EMA has been supportive multiple times over the last couple of weeks, so it will be interesting to see if that can continue to be the case. With this, it looks as if the market is trying to do everything it can to reverse and go to the upside, perhaps changing the longer-term trend. For what it is worth, we have seen a bit of US dollar strength against multiple currencies out there, not just the Canadian dollar.
Granted, Friday was a very negative day for the greenback, but the question at this point is whether or not there was a little bit of short covering of other currencies heading into the Independence Day holiday weekend, or if it is something more important. One thing is for sure: Asian and European traders do not seem to be too impressed by the Friday candlestick, so I find it very interesting that we are simply hanging around this area.
OPEC+ is currently trying to decide whether or not we are going to see continued production cuts, especially as the United Arab Emirates have stood on the sidelines and been a bit of a thorn in the side of other countries hoping to come to an agreement. If an agreement cannot be reached, it is very likely that oil will initially rally, followed by a significant fall, as it would only be a matter of time before certain members and OPEC would start pumping out more oil.
It is worth noting that the US dollar has done extraordinarily well against the Canadian dollar, despite the fact that oil has been rallying. With that being the case, it does make sense that we would see a bit of a divergence continue, due to the fact that a lot of headwinds are out there when it comes to the idea of selling the greenback, as inflation in America might start rising and push more demand for dollars. Nonetheless, when you look at this chart, it is obvious that we are being squeezed between the 50-day EMA and the 1.25 handle above. I think we will continue to bang around in this area.
