The US dollar pulled back a bit against the Canadian dollar Wednesday as we continue to see a lot of noise near the 1.30 level. It’s worth noting that the inflation numbers came out hotter than anticipated in the United States, initially causing the US dollar to spike. However, it’s likely that we have a lot of noise ahead of us because this pair is quite often noisy.
I was just at the US/Canada border 10 days ago, and it is just as busy as ever. Extreme amounts of commerce continue to cross the border, meaning that cross-border transactions made out of necessity continue to be a major problem. The 1.31 level above continues to cause a significant amount of resistance, and it is a number that I will be paying attention to as it is important. If we were to break above there, it’s likely that we could break out and go much higher. Not only is it an area where we have seen a lot of resistance, but it’s also the top of the channel that we have been in for a while, so if we were to break above there, then it’s likely that we would see quite a bit of follow-through.
The 1.29 level is an area that I think offers a certain amount of support, especially as the 50-day EMA is approaching that level as well. Ultimately, I think that this market is worth suggesting an upward tilt, as the channel has been so reliable recently. Furthermore, you should also note that the recent lows have been higher as we’ve gone along and therefore it’s likely that we continue to see more upward pressure.
The 1.30 level seems to be the epicenter of trading, and I think short-term traders will continue to use it as a bit of a pivot point. I do think eventually we will get an impulsive candlestick that people pay attention to, but until that happens, you have to think of this more or less as a sideways market and will continue to act as such. With this, I believe that you are probably going to see more “buying on the dip” than anything else. Selling is not something I’m interested in doing until we clear the 50-day EMA at the very least.
Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.