The US dollar initially fell during the trading session on Monday but found the 200 day EMA to be supportive yet again. Because of this, after we dip just below that indicator, buyers came in and pick this market back up. As I record this video, we are fighting the 50 day EMA, which sits at the 1.2692 level.
Keep in mind that the crude oil markets were a little bit soft during the day so that might be one of the main drivers of what happened. All things being equal, you should also pay close attention to the fact that interest rates in the United States continue to rise, so that also make the US dollar a lot more attractive. Nonetheless, the 200 day EMA probably attracted enough attention by itself, as a lot of longer-term algorithmic trading strategies pay close attention to that indicator. Ultimately, it looks as if we are trying to set up some type of consolidation area that we can bounce around in, extensively between the 1.2625 level and the 1.28 level above.
Ultimately, we are bouncing around between the 200 and the 50 day EMA indicators, and a lot of times that means that we are squeezing and building up inertia for a bigger move. It will be interesting to see how this plays out, because while the Canadians have been adding more jobs than anticipated, the United States has not. However, the bond markets will have a lot to say so you need to pay attention to the US 10 year yield, and of course the Canadian 10 year yield. You can find all of this a Tradingview, which is a great place to watch bond markets. Nonetheless, it looks as if we are about to make a move and that of course is something that we need to be part of. By being patient enough, you can see this market break out of this 150 PIP range, which could open up a move to the upside of 1.30, or perhaps a break down towards the 1.24 handle level underneath. Ultimately, this is a market that is coiling up in order to make a bigger move, so I am very interested in watching the USD/CAD pair currently. However, I need to see the market tell me which direction is going to break before I put money into the trade.
