US dollar has fallen a bit against the Canadian dollar during the trading session on Thursday, to reach down towards the previous uptrend line. It is worth noting that the 1.25 level is sitting in the same general vicinity as well, therefore it looks like the market will pay attention to this region. Furthermore, the 50 day EMA sits just below there, just as the 200 day EMA sits just above. With that in mind, we are squeezing, which is something that quite often happens before we get big news.
The Friday session should be rather interesting for this pair, mainly due to the fact that the jobs number in the United States comes out at the exact same time as the Canadian jobs number. In other words, this will be “Ground Zero” for the employment reaction, so it will be interesting to see how this plays out. By the end of the day, it will also be equally telling if we break out of this range between the two moving averages.
All things been equal, it is worth paying close attention to this uptrend line, because the market has bounced from the crucial 1.20 handle. That is a level on the longer-term charts that has been important for quite some time, and by bouncing the way we have, it suggests that the market is trying to change the overall trend, but if we were to break down below the 50 day EMA, then it is likely that the market could go looking towards the 1.20 handle underneath. That of course being tested again could be a bad look for this pair, especially if the US dollar continues to struggle against multiple currencies.
Beyond all of that, the crude oil market also has a major influence on the Canadian dollar, so it will be interesting to see whether or not that pushes the market lower or not. It should be noted that recently the crude oil market has struggled to make a “higher high”, and that structure is starting to look a little bit threatened. I think as long as we have noisy trading in that market, we will probably continue to see noisy trading in this environment. Adding to the equation the fact that the overall demand picture for crude oil is not as clear as it once was, we could see a lot of choppy behavior.
